AI, data to form 45% of India's tech change spend by 2026: Bain

AI and data-led transformation will account for 40-45% of India's change-related tech spending by 2026, with overall IT spending growing at 6-8%, ahead of the global average, according to a Bain & Company report.

India's Tech Spending on the Rise

Artificial intelligence and data-led transformation are expected to account for 40-45 per cent of India's change-related technology spending in 2026, as companies accelerate investments in modernising their digital infrastructure, according to Bain & Company's "India Enterprise Technology Report 2026."

The report said Indian enterprises are in the middle of a strong technology investment cycle, with overall IT spending in the country expected to grow 6-8 per cent in 2026, ahead of the 4-6 per cent growth expected globally.

"Approximately 40% of 2026 technology budgets are expected to be allocated to change initiatives, with 40%-45% of that change spend focused on AI and data-led transformations, reflecting AI's growing role in enterprise technology investments," the report said.

Focus on Long-Term Capability Building

According to the report, Indian enterprises are allocating a larger share of their technology budgets toward long-term capability building, with capital expenditure accounting for 50-60 per cent of technology budgets in India, compared to 20-30 per cent globally. It added that these investments are mainly being directed towards AI platforms and data modernisation, which account for 30 per cent of capex, followed by core application modernisation and cloud infrastructure.

The report, based on insights from more than 250 technology and business leaders across sectors in India, highlighted that companies are increasingly focusing on strengthening core technology foundations to prepare for AI adoption at scale.

"About 60% of CIOs will prioritize high-impact AI roadmaps, alongside application rationalization and data modernization, in the next 12 months," the report stated.

Challenges in Tech Transformation

However, Bain & Company noted that despite the sharp rise in spending, many organisations are still struggling to convert technology investments into measurable business outcomes. "Only 15% of business leaders view IT as truly strategic, while 70% rate it as 'good, but not great'," the report said, adding that businesses need to move away from implementation milestone-based metrics and adopt "outcome-based measures linked to growth, efficiency, and profitability."

The report also flagged legacy technology systems as a major hurdle in enterprise transformation. "Approximately 72% of CIOs cite legacy tech debt as the top barrier to transformation," followed by skill shortages in next-generation domains and "unproven ROI from new-age tech initiatives."

The 'Future-Back' Approach to AI

Sandeep Nayak, Partner & APAC Leader of the Technology Practice at Bain & Company, said companies now need to rethink their technology strategies in the AI era. "At a time when AI is accelerating the pace of change, it is no longer only about modernizing technology stacks or addressing technical debt. Now is the time to go 'future back' and reimagine the enterprise," Nayak said.

The report further said enterprises adopting a "future-back" approach could unlock "15%-20% absolute EBITDA improvement" through higher revenues and operational efficiencies.

Nagaraj Gn, Partner & Head of India Enterprise Technology at Bain & Company, said companies will need to rethink operating models, governance structures and talent strategies to fully benefit from AI-led transformation. "We are now in a fundamentally different paradigm where all of these will be key to unlocking value at scale and sustaining the impact of technology investments," he said. (ANI)

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