Technology researcher Gartner has revised downwards the growth of India's information technology (IT) spending to 7.5 per cent at $7.8 billion (nearly Rs 51, 892 crore) for this year, owing to the adverse impact of demonetisation on industrial production in the January-March quarter.
"This is down from Gartner's previous projection for 9.5 per cent growth this year," said the firm in a note on Thursday.
India's overall economic growth reportedly fell to 6.1 per cent in the fourth quarter of the financial year 2016-17, primarily due to the adverse impact of demonetisation on economic activity. This marked the lowest growth rate in four quarters. Construction and financial services were the most impacted sectors.
"The 2 per cent revision in our outlook is primarily due to the effects of demonetisation and a drop in industrial production," said Moutusi Sau, principal research analyst at Gartner.
Sau, however, added that government spending in affordable housing scheme and increased loans being extended to small and medium enterprises are likely to have a positive effect on IT spending in the next few quarters.
Meanwhile, Gartner said the IT services sector, which includes areas such as consulting, software support, business process outsourcing, IT outsourcing, implementation and hardware support, is expected to grow 10.8 per cent to $2 billion this year.
Expected growth in the segment is likely to put IT services in the largest spending category of the IT sector.
Software segment alone is expected to grow 10.8 per cent to $1.1 billion in 2017. This includes enterprise resource planning, supply chain management, customer relationship management, desktop, infrastructure, vertical-specific software and other application tools.