India will be the fastest growing IT market for 2nd year in succession; IT spending to reach $72.3 Billion in 2016, says Gartner

India IT spending is forecast to reach $72.3 billion in 2016, a 7.2 percent increase from 2015, according to Gartner, Inc.

The IT industry is being driven by digital business, and an environment driven by a connected world. Gartner predicts spending on Internet of Things (IoT) hardware will exceed $2.5 million every minute in 2016. Mike Harris, group vice president at Gartner, explained today to an audience of more than 1,000 CIOs and IT leaders at the sold out Gartner Symposium/ITxpo, that interconnections, relationships, and algorithms are defining the future of business.

“In five years, 1 million new devices will come online every hour. These interconnections are creating billions of new relationships. These relationships are not driven solely by data, but algorithms,” said Partha Iyengar, distinguished analyst and head of research at Gartner India. “Data is inherently dumb. It doesn’t actually do anything unless you know how to use it; how to act with it. Algorithms are where the real value lies. Algorithms define action. Dynamic algorithms are the core of new customer interactions.”

The algorithmic economy will power the next great leap in machine-to-machine evolution in the Internet of Things. Products and services will be defined by the sophistication of their algorithms and services. Organizations will be valued, not just on their big data, but the algorithms that turn that data into actions, and ultimately impact customers.

“India will continue to be the fastest growing IT market for the second year in succession and will continue growing to total $87.67 billion by the end of 2019,” said Aman Munglani, research director at Gartner. “India is currently the third largest IT market in Asia/Pacific, and by 2019 India will become the second-largest IT market within the Asia/Pacific region, following China.”

Devices, which include mobile phones, PC’s and tablets, will account for almost 33 percent of the overall IT spend in India, and the devices segment will grow 9.4 percent in 2016. Mobile phones will continue to be the single largest technology sub segment in India and the third fastest-growing through 2019.

“Data center systems will grow 3.9 percent in 2016, with most of this growth coming from enterprise network equipment and servers that will grow at 5.9 percent and 5.3 percent, respectively. IT services, which accounts for 18.1 percent of overall IT spend in India, will be the fastest growing segment in India in 2016 with 13.8 percent growth year on year. Within these segments, business IT services will grow 15.2 percent over 2015 figures,” said  Munglani.

Software, which accounts for nearly 7 percent of IT revenue in India, will grow 12.7 percent as a segment, but within this segment, enterprise application software will be the fastest growing sub segment in 2016, with revenue forecast to grow 16.2 percent over 2015. Communication services will continue to account for the largest share of IT spend in India and will account for 39.2 percent of revenue in 2016, however, this will also the slowest growing segment with a 2.1 percent increase in revenue in 2016.

The driving force behind this IT spending growth is the emergence of digital business.