IT spending focus Areas for Indian Enterprises

Amid increased thrust on digitization across the operational spectrum, it is hardly surprising that enterprises are investing heavily in initiatives aimed at transforming their IT capabilities. Expansion and enhancement of their IT infrastructure are now closely tied to enterprises’ profitability, since an organization’s ability to navigate a digital landscape, the complexity of which is constantly on the rise, is linked to its IT capabilities.

According to Gartner, expenditure on IT infrastructure is slated to increase by 8% across the board in 2024, compared with the previous year. In comparison, Indian enterprises’ IT spending is increasing at a much faster rate, though from a lower base, accounting for only 2.7-3% of global IT spending. 

This increase is primarily driven by the need for businesses to stay competitive, as well as the difficulties that enterprises are encountering in hiring skilled professionals compared to IT service firms.

The second factor contributing to this increase is the significant investment in digital transformation and Generative AI (GenAI) as enterprises are recognizing the importance of investing in these technologies and this shift is driven by the opportunities presented by digital transformation and the potential benefits of Gen AI technologies.

On this front, Indian enterprises are focusing on six main areas namely Data, AI, Digital Infrastructure, Cybersecurity, Digital Experience, and Regulatory Compliance.

Data-driven focus

Enterprises now understand how important it is to be data-driven. Traditionally data was used for compliance reporting. However, now, enterprise data is used not just for analytics and decision-making but also for all kinds of AI, ranging from Machine Learning to Generative AI. Organizations use AI differently, whereas established ones look at prescriptive analytics, while early-stage adopters focus on descriptive and diagnostic analytics. With Gen AI, companies want to go a step ahead from proof of concept and focus on establishing use cases that create value.

Digital infrastructure shift

To ensure that data is available across the organization, the infrastructure has had to change from traditional datacenter-driven infrastructure to a more digital infrastructure that the cloud enables. Traditionally, digital infrastructure has always been a challenge for Indian enterprises, since capital expenditures in IT were always low. But with the hyper-scalars building their DCs locally, the cloud has become local, making it easier for Indian enterprises to make use of them. Also, as more systems become digital, the digital infrastructure that is hosting all these must be robust and resilient and when this task gets handed over to the hyper-scalars the enterprises can focus on their internal applications rather than worrying about the infrastructure that hosts them. 

Cybersecurity imperative

When enterprises move to a digital infrastructure, cybersecurity becomes an important area for them to invest in. Today, enterprises around the world are witnessing a rise in cyber-attacks; thus, areas like cybersecurity have seen one of the highest investments in IT. This includes the setting up of Security and Network Operations Centers, tools for detecting cyber-attacks, and investments in anti-virus and network security scanner tools, as well as email and web security tools.

Digital Experience

All this results in a terrific digital experience, which was not once considered an important driver for growth for early-stage digital organizations. But it is changing because consumers, employees, customers, agents, and dealers are forcing these enterprises to re-think the experience they provide. However, experience cannot be looked at in isolation. Businesses must reconsider how they present the digital experience across all of the platforms on which they conduct business. In the same way, adjustments to internal systems are required to provide that experience to customers.

Regulatory compliance

The last key focus area is the government's growing body of regulations to protect privacy and equity, which is driving up business investments to comply with the laws. The foundation for personal data privacy legislation in India was established by the Digital Personal Data Protection Act.

Since language models have shown bias and hallucination, the government is considering adding additional laws to protect this area; these laws may be included in the Digital India Act. This implies that if enterprises plan to invest in GenAI, they need to make sure that all legal criteria are met. The fact that most regulations have a deadline compels businesses to make the necessary investments to meet and adhere to the requirements.

Given that Indian enterprises are investing considerable resources, and energy, in expediting their digital transformation journeys, there is bound to be a proportionally huge increase in financial allocation toward enhancing IT capabilities. The focus on boosting IT capabilities in the years to come is also likely to be a lot more focused; given the acknowledged abilities of AI tools, particularly large language models, expenditure on expanding IT infrastructure is likely to reorient itself to enable seamless and efficient operations of such advanced technologies.

On the other hand, governments the world over, have taken cognizance of the transformative capabilities of AI tools, but remain slightly wary of the same. Therefore, Indian enterprises too will be keen on ensuring compliance with all government regulations, investing resources and funds to that end. Lastly, one can never entirely ignore the threat that cybercriminals pose to the security and integrity of an enterprise’s digital infrastructure; the mutating nature of the threats necessitates the adoption of IT solutions that can be prepared to effectively combat them. 

Written by - Varghese Cherian, Head of Technology Services at UST

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