India’s technology spending this year is estimated to be the highest in Asia Pacific (APAC) and will grow by 8 per cent, said a report on Wednesday.

According to Forrester’s ‘Asia Pacific Tech Market Forecast, 2023 to 2027’, India’s technology spending will reach around USD 54.5 billion (around Rs 4.49 trillion).

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“India’s domestic tech economy continues to enjoy strong growth due to an all-round digitisation push from the central and state governments,” the report said.

Technology spending in APAC will grow at a compound annual growth rate (CAGR) of 6.4 per cent to 7.4 per cent per year from 2024 to 2027, reaching USD 876 billion in 2027.

The report highlighted that the spending on software will continue its rapid growth over the next few years. It will be followed by spending on information technology (IT) services, communications equipment, and computers.

The share of software purchases will climb from 26.4 per cent in 2024 to 30 per cent of total technology spending in 2027, outpacing the other IT categories due to demand generated by artificial intelligence and AI-augmented enterprise software and services.

Singapore in APAC will this year see the second highest growth in technology spending at 5 per cent, reaching USD 18 billion after India.

Australia’s technology spending will grow by 4 per cent and China by 2 per cent. China has the largest technology spending — in absolute terms — APAC at USD 261.9 billion.

Leslie Joseph, principal analyst at Forrester said, “While challenges such as regulatory environments, global economic conditions, and talent shortages in the region present hurdles, overall, the APAC market is well-positioned for tech growth.”

“As the region continues to grow in importance in the tech world, new opportunities offered by the explosion of AI and the increased demand for cloud can be significant revenue and growth drivers for firms,” Leslie added.

As per the report, the technology spending in six major Southeast Asian economies — Indonesia, Malaysia, Philippines, Thailand, Taiwan, and Vietnam — will hit USD 74 billion in 2024, representing a 1 per cent growth.

Uptick in digital consumption spurred by large millennial and Generation Z populations, favourable policies, and investments by technology giants will accelerate digital innovation.