India’s AI push gathers pace as enterprise tech spending set to rise 6-8% in 2026: Bain

A recent report from Bain & Company reveals that Indian businesses are poised for a notable increase in technology investments by 2026, with artificial intelligence (AI) and data transformation leading the charge. The consulting firm projects an IT expenditure growth of 6% to 8% in India, outpacing the anticipated global growth of 4% to 6%. This surge is driven by companies eager to modernize and leverage AI for transformative business strategies. Bain's findings indicate that approximately 40% of enterprise technology budgets will be directed towards initiatives aimed at change, with an impressive 40% to 45% of that amount focused specifically on AI and data transformation projects. The report highlights a significant shift among Indian companies—from incremental digital upgrades to comprehensive technology reinvention. According to Sandeep Nayak, a Partner and APAC Leader of the Technology Practice at Bain, the emphasis is moving from the amount spent to the effectiveness of that spending in generating business value. He stated, "As AI accelerates change, the focus must now shift to reimagining the enterprise rather than merely modernizing existing technology stacks." The report also reveals that Indian enterprises are committing a larger portion of their budgets toward long-term tech capabilities compared to their global counterparts. Capital expenditures now make up 50% to 60% of technology budgets in India, significantly higher than the 20% to 30% observed globally. Notably, almost 30% of this capex is allocated to AI platforms and data modernization initiatives, with core application upgrades and cloud infrastructure each receiving around 25%. Cybersecurity investments account for approximately 20% of spending. This surge in technology investment coincides with a global movement to integrate generative AI into business processes and automate operations. Bain reports that nearly 60% of Chief Information Officers (CIOs) in India are prioritizing impactful AI strategies and data modernization efforts over the coming year. Cybersecurity is also a key focus for about half of the surveyed CIOs. Despite the increase in IT spending, the report cautions that many organizations are grappling with the challenge of translating their investments into tangible business outcomes. Only 15% of surveyed business leaders consider their IT functions to be "truly strategic," while nearly 70% view them as merely "good, but not great." This disconnect underscores the necessity for enterprises to assess technology effectiveness through metrics of business success, such as growth and efficiency. Legacy technology debt remains a significant barrier to transformation, as identified by 72% of CIOs. Additionally, skill shortages in emerging tech areas were noted by 57% of respondents, and 49% expressed concerns about the uncertain returns on investment from new technology initiatives. Furthermore, around 90% of business leaders believe their current data capabilities and AI maturity are inadequate for large-scale deployment of AI across the enterprise. Without substantial changes in operational models, talent strategies, and data infrastructure, Bain warns that current investments may lead to the "legacy tech of tomorrow." The report advocates for a "future-back" approach, where enterprises redesign their operations and technology structures around long-term AI-driven business models. This strategy could potentially lead to a 15% to 20% improvement in EBITDA through enhanced efficiency and revenue growth. Nagaraj Gn, Partner and Head of India Enterprise Technology at Bain, emphasizes that a mere incremental approach to technology strategy will not maximize the impact of AI investments. He urges technology leaders to rethink their architecture and operational models with a future-centric vision, particularly as businesses prepare for a landscape increasingly influenced by AI agents and quantum computing advancements.