India IT spending to grow 8% in 2026, AI to drive 45% of tech budgets: Bain
Synopsis
India's IT spending is set to grow up to 8% in 2026 — double the global rate — with AI and data transformation consuming nearly half of all change budgets. But Bain's survey of 250-plus leaders reveals a troubling paradox: record capex is not translating into enterprise-wide value, with 90% of business leaders saying their data and AI foundations are not yet ready for scale.
Key Takeaways
India's IT spending is projected to grow up to 8 per cent in 2026 , versus 4–6 per cent for global peers.
AI and data transformation expected to drive 40–45 per cent of change-related tech expenditure.
Indian firms allocate 50–60 per cent of tech budgets to capex, against 20–30 per cent globally.
72 per cent of CIOs cited legacy tech debt as the top barrier to transformation.
90 per cent of business leaders say current data and AI maturity is insufficient for enterprise-wide scale.
India's enterprises are projected to increase IT spending by up to 8 per cent in 2026, outpacing the 4–6 per cent growth forecast for global peers, according to a report released on Thursday, 7 May 2025 by Bain & Company. The report, based on responses from over 250 technology and business leaders across India, found that AI and data transformation are expected to drive 40–45 per cent of all change-related technology expenditure this year.
India's Structural Investment Advantage
Technology spending in India has accelerated sharply over the past 12–18 months, and the momentum is expected to sustain for the next 2–3 years, signalling a structurally stronger investment cycle than what global benchmarks reflect. Indian enterprises are allocating a significantly higher share of budgets toward long-term capability building — particularly in AI platforms and data modernisation.
Capital expenditure accounts for 50–60 per cent of technology budgets in India, compared with just 20–30 per cent globally — a gap that underscores how aggressively domestic enterprises are betting on foundational infrastructure rather than operational maintenance.
Where the Money Is Going
AI platforms and data modernisation together accounted for 30 per cent of capital expenditure among Indian firms. Core application modernisation and cloud and IT infrastructure each claimed 25 per cent, while cybersecurity accounted for 20 per cent of tech spending — reflecting a clear pivot toward strengthening foundational capabilities ahead of AI-led scale.
Around 40 per cent of 2026 technology budgets are expected to be allocated to change initiatives, with AI and data-led transformations accounting for nearly half of that share. About 60 per cent of CIOs are forecasted to prioritise high-impact AI roadmaps, alongside application rationalisation and data modernisation, in the next 12 months.
The Value Delivery Gap
Despite record investment levels, a clear gap remains between spending and actual value delivery, the report warned. Sandeep Nayak, Partner and APAC Leader of the Technology Practice at Bain & Company, said the pace of AI-driven change demands a fundamental reimagining of enterprise structures.
Point of View
Yet nine in ten business leaders admit their foundations cannot support scale. That is not a spending problem — it is a sequencing and governance problem. Pouring capex into AI platforms before resolving legacy tech debt and skill gaps risks creating a new layer of stranded investment atop the old one. The 72 per cent of CIOs flagging legacy debt as the top barrier is the most important number in this report, and it deserves more attention than the headline growth figure.
NationPress
9 May 2026
Frequently Asked Questions
How much is India's IT spending expected to grow in 2026?
India's IT spending is projected to grow by up to 8 per cent in 2026, according to a Bain & Company report. This outpaces the 4–6 per cent growth forecast for global peers.
What share of India's tech budget is going toward AI in 2026?
AI and data transformation are expected to account for 40–45 per cent of change-related technology expenditure in 2026. Around 40 per cent of total tech budgets are allocated to change initiatives, making AI the dominant driver.
Why are Indian enterprises spending more on capex than global peers?
Indian enterprises allocate 50–60 per cent of technology budgets to capital expenditure, compared with 20–30 per cent globally, reflecting a strategic focus on long-term capability building in AI platforms and data modernisation rather than operational upkeep.
What are the biggest barriers to tech transformation for Indian CIOs?
Nearly 72 per cent of CIOs cited legacy tech debt as the top barrier, followed by skill shortages in next-generation domains at 57 per cent and unproven returns on new-age tech investments at 49 per cent, according to the Bain & Company report.
Are Indian enterprises ready to scale AI across their organisations?
Approximately 90 per cent of business leaders indicated that current data foundations and AI maturity are not sufficient to support enterprise-wide scale, highlighting a significant gap between investment and value delivery.
