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India's Tech Spending to Surge 8% by 2026, Driven by AI Boom

India's enterprise IT spending is projected to grow up to 8% in 2026, outpacing the 4-6% growth expected for global peers. AI platforms and data modernisation are driving this surge, accounting for 30% of capital expenditure in Indian firms. However, a gap remains between investment and value delivery, with 72% of CIOs citing legacy tech debt as the top barrier to transformation. About 90% of business leaders say current data foundations and AI maturity are insufficient for enterprise-wide scaling.

Key Points: India Tech Spending Growth 8% by 2026: AI Key

  • India's IT spending to grow up to 8% in 2026, outpacing global 4-6% growth
  • AI and data transformation to drive 40-45% of change-related tech expenditure
  • Capital expenditure accounts for 50-60% of tech budgets in India vs 20-30% globally
  • 72% of CIOs cite legacy tech debt as top barrier to transformation
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India projected to outpace global peers in tech spending growth driven by AI: Report

India's IT spending is projected to grow up to 8% in 2026, outpacing global peers, with AI and data transformation driving 40-45% of change-related tech expenditure.

"Despite record levels of technology investment, many organisations still struggle to realise full value due to misalignment between business and IT, gaps in data and AI foundations, and legacy operating models. - Sandeep Nayak"

New Delhi, May 7

India's enterprises are seeing a significant technology spending surge, with IT spending expected to grow up to 8 per cent in 2026, with AI and data transformation expected to drive 40-45 per cent of change-related tech expenditure, a report said on Thursday.

The report by Bain & Company said India's IT spending growth is expected to outpace the 4-6 per cent increase projected for global peers.

Spending has accelerated over the past 12-18 months and the trend is expected to continue for the next 2-3 years, underscoring a structurally stronger investment cycle.

A clear gap, however, remains between investment and value delivery, the report said, based on responses from over 250 technology and business leaders across India.

Indian enterprises are allocating a significantly higher share of their budgets toward long-term capability building, especially in AI platforms and data modernisation. Capital expenditure accounts for 50-60 per cent of technology budgets in India, compared with 20-30 per cent globally.

AI platforms and data modernisation accounted for 30 per cent of the capex spending of Indian firms.

Core application modernisation (25 per cent), cloud and IT infrastructure (25 per cent), and cybersecurity (20 per cent), accounted for a major share of tech spending, reflecting a clear pivot toward strengthening foundational capabilities.

As AI accelerates the pace of change, it is time to reimagine the enterprise, zero-basing processes, redesigning operating models, and consequently, architecting an AI and Technology real estate that can expedite the journey, said Sandeep Nayak, Partner & APAC Leader of the Technology Practice, Bain & Company.

"Despite record levels of technology investment, many organisations still struggle to realise full value due to misalignment between business and IT, gaps in data and AI foundations, and legacy operating models," Nayak said.

Around 40 per cent of 2026 technology budgets are expected to be allocated to change initiatives, with AI and data-led transformations accounting for nearly half of it, the company said.

About 60 per cent of CIOs will prioritise high-impact AI roadmaps, alongside application rationalisation and data modernisation, in the next 12 months, it is forecasted.

Nearly 72 per cent of CIOs cited legacy tech debt as the top barrier to transformation, followed by skill shortages in next-gen domains (57 per cent) and unproven return on investments from new-age tech initiatives (49 per cent).

Approximately 90 per cent of business leaders indicated that current data foundations and AI maturity are not sufficient to support enterprise-wide scale.

- IANS

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Reader Comments

S
Sarah B
Interesting report. I work in IT here in Bangalore, and the AI push is real. But the Bain study rightly points out the gap between investment and delivery. Too many companies buying fancy AI tools without fixing their data foundations first.
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Vikram M
40% of budget on change initiatives by 2026? That's huge! But honestly, many Indian firms are still using systems from 2010. We need to modernize core apps before jumping on the AI bandwagon. Otherwise it's just throwing money away.
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Kavya N
The caution about data foundations not being ready for AI is spot on. 😅 I see it in my company - everyone wants AI dashboards but our data is still in Excel sheets. Hope this report makes leaders focus on basics first.
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Rohit P
As a startup founder, this is both exciting and worrying. AI spending is good, but small businesses like mine struggle with skill shortages - that 57% figure mentioned hits home. We need more training programs, not just big company spending.
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Michael C
The comparison with global peers is telling. India allocating 50-60% to capex vs 20-30% globally shows we're building for the long term. But the return on investment issue (49% worried about it) means we need smarter execution, not just more spending.

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