Tech spends in India to hit a 10-year low in 2020: Forrester

In 2020, India will have the slowest tech spending growth in at least a decade on account of sharp economic disruption due to the Covid-19 pandemic, according to a new report by market research firm Forrester.

“In the best case, tech market growth will slow to 1.2 per cent in 2020 and jump back to 8.4 per cent in 2021. This scenario becomes less likely if India’s major economic hubs remain under strict lockdown beyond June 2020. The other scenario is worse: Tech spending might contract by up to 4.8 per cent in 2020 with only a mild recovery, to 1.4 per cent growth, in 2021,” the report said.

Forecast revision

Forrester’s 2019 prediction had pegged tech spending growth at 7 per cent in 2020. But the countrywide lockdown in March brought everything to a grinding halt, leading to unprecedented economic woes not seen even during the 2008 global financial crisis. Forrester has had to revise its tech spending forecasts across the globe.

To revise India's tech spending forecast for 2020 and 2021, Forrester looked at the IMF’s April 2020 revised growth forecasts for India’s GDP. The research firm paired this with a model of macroeconomic outcomes from the assessment of the Covid-19 pandemic’s impact on global economies by the Australian National University’s Centre for Applied Macroeconomic Analysis (CAMA) .

The report states that the biggest impact would be on tech consulting services, hardware, and software. Tech outsourcing and hardware maintenance will also see a decline in growth but could be the least impacted.

“Most firms we speak with have come to terms with the unprecedented nature of the pandemic and expect to be dealing with a different world once it’s over. Some firms are beginning to reprioritize initiatives and conserve and reallocate their IT budgets,” the report said.