New Delhi: India’s IT spending is expected to reach $176.3 billion in 2026, up 10.6 per cent on-year, driven by accelerating adoption of cloud and digital technologies, a report said on Tuesday. The data center systems segment is projected to record the highest annual growth rate, rising 20.5 per cent in 2026 to $9,385 million. Evolving data privacy and sovereign cloud requirements are expected to drive growth in this segment through 2026, the report from Gartner said.

“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.

“As the uncertainty pause that began earlier this year eases, rising demand for AI infrastructure will fuel new investment in data centers in India,” said DD Mishra, VP Analyst at Gartner.

Mishra said that 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, enhancing customer experience, and operational efficiency will propel IT spending growth, he said.

Software spending is projected to grow 17.6 per cent to $24.7 billion as enterprises ramp up investment in AI-enabled software solutions and modern IT infrastructure.

IT services spending is set to grow 11.1 per cent in 2026, with double‑digit growth projected over the next few years, driven by strong enterprise investments in infrastructure as a service (IaaS), consulting, and application modernisation.

The Gartner report said the rapid growth of global capability centers (GCCs) and access to a highly skilled, cost-effective workforce will drive the sector’s growth. Devices spending is expected to rise 9.9 per cent to $66,442 million, while communications services will grow 5.4 per cent to $40,414 million, the report noted.