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- 10 Apr 2023
- ICICIdirect Research
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GARTNER PROJECTS ACCELERATION IN IT SERVICES GROWTH IN CY23
News: Gartner in its latest press release said the total tech spending globally is pegged at US$4.64 trillion in CY23 and US$5 trillion in CY24. IT services (that form 29.4% of the mix) growth, which was earlier estimated at 5.5% in CY23 is now estimated at 9.1%. First time Gartner gave projections for CY24 wherein it expects IT services to grow 10.2%.
Views: The press release suggests IT spending across geographies remains strong despite many countries projected to have a muted growth and high inflation in 2023. Acceleration in IT services could be attributed to prioritisation of IT spending by enterprises to capture competitive advantages through increased productivity, automation & other software driven initiative. In our view, this is in line with current trend of increasing mix of cost optimisation deals in the TCV as reported by IT companies. Growth projections by Gartner in 2024 are largely in line with Nasscom long term growth projections for FY23-30. We also believe that this projections also likely suggests minimal impact of current BFSI issues in US regions on IT spending and spending in BFSI likely to be stable in CY23 & CY24. The press release also suggests that demand supply mismatch of talent likely to stay till CY26, which as per our view may not play out for Indian IT companies, which are already showing a downward trend in attrition.
Impact: Positive