AI Infrastructure and Data Sovereignty to Propel Data Center Systems Growth Next Year
FinTech BizNews Service
Mumbai, November 18, 2025: IT spending in India is expected to reach $176.3 billion in 2026, an increase of 10.6% from 2025, according to the latest forecast by Gartner, Inc., a business and technology insights company.
“Enterprises in India are accelerating their adoption of cloud and digital technologies, which will drive sustained, robust growth in IT spending in 2026,” said DD Mishra, VP Analyst at Gartner. “As the uncertainty pause that began earlier this year eases, rising demand for AI infrastructure will fuel new investment in data centers in India.
“Additionally, local CIOs will continue to prioritize investments in cybersecurity, AI/ML and data analytics. Their ongoing commitment to modernizing applications, strengthening connectivity, implementing hyper-automation and enhancing both customer experience and operational efficiency will be key factors propelling IT spending growth in the region.”
Gartner analysts are discussing the latest technology and trends impacting the future of IT during Gartner IT Symposium/Xpo, taking place here through Wednesday.
AI Infrastructure and Data Sovereignty Propel Data Center Systems Growth
The data center systems segment in India is projected to record the highest annual growth rate, increasing 20.5% in 2026, continuing to outpace all other IT segments despite moderating from 29.2% in 2025.
India IT Spending Forecast, 2025-2026 (Millions of U.S. Dollars)
| 2025 Spending | 2025 Growth (%) | 2026 Spending | 2026 Growth (%) |
Data Center Systems | 7,788 | 29.2 | 9,385 | 20.5 |
Devices | 60,443 | 9.4 | 66,442 | 9.9 |
Software | 21,032 | 12.1 | 24,741 | 17.6 |
IT Services | 31,854 | 7.0 | 35,383 | 11.1 |
Communications Services | 38,348 | 3.8 | 40,414 | 5.4 |
Overall IT | 159,465 | 8.7 | 176,365 | 10.6 |
Source: Gartner (November 2025)
“Data center systems spending is primarily driven by substantial AI infrastructure investments and multiple government programs aimed at strengthening the local AI ecosystem,” said Naresh Singh, Senior Director Analyst at Gartner.
“India has one of the largest consumer bases for AI services globally, attracting international investment in local infrastructure to support this expanding user base. Evolving data privacy and sovereign cloud requirements are expected to drive growth in this segment through 2026.”
Software spending in India is projected to increase 17.6% in 2026, reaching $24.7 billion, as Indian enterprises ramp up investment in AI-enabled software solutions and modern IT infrastructure.
As GenAI increasingly permeates software, it is poised to become a standard, embedded component across nearly all applications. Gartner forecasts that by 2026, global spending on software with GenAI will surpass spending on software without GenAI.
IT Services Spending Accelerates with Expected Double-Digit Growth
“IT services spending in India is forecast to grow 11.1% in 2026, with double-digit growth projected over the next few years — averaging between 12% and 14%,” said Mishra. “This momentum is driven by strong enterprise investments in infrastructure as a service (IaaS), consulting and application modernization.
“The rapid growth of global capability centers (GCCs) and access to a highly skilled, cost-effective workforce are expected to further fuel the sector’s progress.”
Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of the sales by over a thousand vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.
The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across the hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available to Gartner clients in Gartner Market Databook, 3Q25 Update.
