Why and where spending is estimated to increase when it comes to AI tech?

Why and where spending is estimated to increase when it comes to AI tech?

  • 22.03.2025 21:53
  • financialexpress.com
  • Keywords: AI

IDC predicts India's AI spending will grow 2.2 times faster than overall digital tech by 2027, contributing over $115 billion in economic impact. This growth is driven by increasing investments in AI technologies and their integration into business strategies.

Alphabet Reports
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Context

Analysis of AI Spending Growth and Market Implications

Overview

  • India's AI spending growth: By 2027, India’s spending on AI technology is expected to grow 2.2 times faster than overall digital tech spending.
  • Economic impact: AI will contribute an economic impact of over $115 billion in the next three years.

Key Statistics and Data Points

  • Gen AI success rate: Expected to reach at least a 70% success rate by 2027.
  • IT leadership growth: 40% of IT leaders will advance their careers due to AI integration into business strategies.
  • Workforce skill gap: 55% of companies face delays in project timelines due to digital skills shortages.

IT Spending Projections

  • India’s IT spending: Projected to reach $160 billion in 2025, up by 11.2% from the previous year.
  • Global capex trends: Big tech companies spent $170 billion on capex in the first three quarters of 2024, a 56% YoY increase.

AI Spending Breakdown

  • Software spending: Will account for over half of total AI spending, with:
    • AI-enabled applications and platforms: 2/3 of software spending.
    • AI application development/deployment and system infrastructure: Remaining share.
  • Hardware spending: Includes servers, storage, and IaaS, making it the next largest category.

Global Economic Impact

  • Global AI impact: Estimated to reach $20 trillion, driving interest from emerging tech companies.
  • LLM and AI tool development: Many organizations are expected to develop custom LLMs and AI tools, requiring significant capital investment.

Competitive Dynamics and Strategic Considerations

  • AI adoption acceleration: CIOs are shifting budgets beyond proof-of-concept projects for generative AI.
  • Skill requirements: Companies must address workforce skill gaps to avoid project delays.

Long-Term Effects and Regulatory Implications

  • Economic growth potential: AI’s contribution to GDP is significant, with opportunities for tech companies to capitalize on advancements.
  • Regulatory considerations: As AI adoption grows, regulatory frameworks may need to evolve to manage economic and workforce impacts.