MUMBAI: The COVID-19 pandemic will lead to an 8 per cent decline in information technology spends in India in 2020 to USD 83.5 billion, a research house said on Wednesday.

This will be the first time in five years that the yearly spends will slip into the negative territory, analysts at Gartner said.

In an estimate released in November 2019, the research house had estimated a 6.6 per cent growth in IT spends to USD 94 billion in 2020.

“In partnership with their chief financial officers (CFOs), chief information officers (CIOs) in India are reprioritising their IT budgets on mission critical initiatives,” Naveen Mishra, senior research director at Gartner said.

He added that fear of a global economic recession due to the COVID-19 pandemic is forcing CIOs in India to be very cautious on their IT spending.

The Indian CIOs will consider extending life cycles of their existing device assets which will delay new purchases, Gartner said, adding spending on devices and data center systems will contract the sharpest.

Data centre systems spends will contract 13.2 per cent in 2020 over the year-ago period to USD 3.186 billion, while devices spend will fall 15.1 per cent to USD 31.07 billion, it said.

Communication services at USD 28.227 billion will be down 1.8 per cent, and enterprise software at USD 6.125 billion will be down 2.6 per cent, making the two segments the least impacted, it said.

Government restrictions like social distancing will result in more spends on business continuity, remote working and workforce collaboration, the research house said.

This will result in a shift in spending toward technologies such as desktop as a service (DaaS), infrastructure as a service (IaaS), virtual private network (VPN) and security, it said, adding that the overall cloud adoption in India has increased.

“The lockdown measures forced sectors such as education, healthcare, and public utilities to accelerate their digital transformation,” Mishra said.

However, for other sectors like retail, insurance and banking, which were already advanced in their digital transformation, have to reduce their IT spending in 2020.

“These sectors will continue to spend on targeted digital initiatives such as artificial intelligence, machine learning and virtual sales assistants, however, they will have to reduce or stop spending on business transformation, process re-engineering and modernisation of existing systems,” Mishra said.