India’s IT Spending to Hit $160 Billion in 2025: Key Drivers Include Generative AI, Cybersecurity, and Data Infrastructure

India’s IT spending is projected to reach $160 billion in 2025, marking an 11.2% increase from 2024, as per recent industry forecasts. This growth reflects a strategic shift by Chief Information Officers (CIOs) across the country, who are prioritizing investments in generative AI (GenAI), cybersecurity, and data infrastructure to support digital transformation.

In 2025, Indian CIOs are expected to allocate significant budgets to GenAI beyond initial proof-of-concept projects. This shift indicates that generative AI is maturing within enterprise environments, transitioning from experimental uses to real-world applications. GenAI’s capabilities in content creation, workflow automation, and enhanced customer engagement are expected to be key focal points, although CIOs are exercising caution regarding its limitations and managing expectations accordingly.

While spending on GenAI-enabled solutions is set to rise, these investments will be part of a broader focus on emerging technologies that support business resilience and growth. Alongside AI, CIOs are planning significant increases in spending on cybersecurity, business intelligence, and data analytics. These technologies address critical priorities for enterprises in India’s rapidly evolving business landscape, providing data protection, strategic insights, and enhanced operational efficiency.

Software spending in India is anticipated to see the highest growth rate across IT categories, with an estimated 17% increase in 2025. This growth will be driven by demand for GenAI-enabled solutions, particularly in customer relationship management (CRM), analytics, and productivity platforms. Many of these GenAI-enhanced software solutions will carry a premium, reflecting their advanced capabilities and high demand among enterprises. By 2025, over 50% of application software with GenAI capabilities are expected to come with a price premium, as vendors refine their pricing models based on customer demand.

IT services spending is also projected to grow by 11.4%, driven by demand for cloud, application modernization, and consulting services. While global IT spending faces pressure from macroeconomic factors, India’s enterprises are pushing forward with digital transformation efforts, seeking IT services that enable greater scalability and efficiency. Cloud-based services and consulting engagements are helping businesses navigate this shift, enabling faster deployment of new technologies and optimizing service delivery models.

Spending on data center systems in India is projected to reach $4.7 billion in 2025, fueled by the need for AI-ready infrastructure. As AI adoption accelerates, enterprises require more robust data storage and computing power, prompting hyperscalers and data center providers to expand their presence in the region. The increase in data center investments also aligns with regulatory requirements around data localization and privacy, as businesses seek to ensure compliance and data security.

For CIOs, data centers represent more than just storage solutions—they are foundational to scaling AI and cloud services. By investing in AI-ready infrastructure, Indian enterprises are setting the stage for future digital initiatives that rely on high-performance computing and data processing capabilities.