India’s enterprises are experiencing a notable increase in technology spending, with IT expenditure set to rise by up to 8% by 2026. A report by Bain & Company highlighted that AI and data transformation are expected to steer 40–45% of the tech spending changes. This growth in IT spending in India is projected to surpass the 4-6% increase estimated for global counterparts.
Over the past 12–18 months, there has been a rapid acceleration in spending, a trend anticipated to persist for the next 2–3 years, indicating a more robust investment cycle. Despite this surge, a noticeable gap exists between investment and value delivery, as per the report based on inputs from over 250 technology and business leaders in India.
Indian companies are directing a significant portion of their budgets towards long-term capability enhancement, particularly in AI platforms and data modernization. In India, capital expenditure makes up 50–60% of technology budgets, a higher proportion compared to the global average of 20–30%. Notably, AI platforms and data modernization constitute 30% of the capital expenditure of Indian firms.
The allocation of tech spending in Indian enterprises reveals a focus on core application modernization (25%), cloud and IT infrastructure (25%), and cybersecurity (20%). This emphasis underscores a shift towards fortifying foundational capabilities. Sandeep Nayak, Partner & APAC Leader of the Technology Practice at Bain & Company, emphasized the need to rethink enterprises in the context of AI, advocating for process reevaluation and model redesign to accelerate the adoption of AI and technology solutions.
The report anticipates that around 40% of the 2026 technology budgets will be dedicated to change initiatives, with AI and data-driven transformations constituting nearly half of this allocation. It is forecasted that in the coming 12 months, about 60% of CIOs will prioritize impactful AI strategies, alongside application streamlining and data modernization. Challenges such as legacy tech debt, skill shortages in emerging domains, and uncertain returns from new tech ventures are cited as barriers to transformation by CIOs.
Moreover, the report highlights that approximately 90% of business leaders feel that existing data foundations and AI maturity levels are inadequate for comprehensive enterprise-scale support.
