Led by a sharp rise in software spending, technology spending in India will grow by 12 per cent in 2018, Forrester’s latest India tech market outlook said on Tuesday.

Software spending is likely to be about 11 per cent of the country’s tech spending in 2018.

While it is usually 20 per cent or more in developed economies, this category will continue to rise at a significantly higher rate than overall Indian tech growth in the coming years, the report added.

“While demonetisation and the fast-tracked implementation of GST slowed growth in 2017, the government is now in a better position to drive reforms and the Indian economy is expected to recover its lost momentum and do progressively better in 2018 and 2019,” said Ashutosh Sharma, Vice President, Research Director and author of the report.

Hardware expenditure will continue to slow, with interest in public cloud adoption growing.

Digital transformation will drive spending on services and outsourcing. Rapid digitisation of the economy and rising numbers of digital consumers will continue to fuel spending on mobility, followed by analytics, Cloud and Internet of Things (IoT), the report noted.

“The Indian enterprises are finally entering the age of analytics — a trend that we observe across sectors. Most industries will increase their business technology (defined as technology, systems, and processes to win, serve, and retain customers) spending,” Sharma said.

Telecom services will revive this year, said Forrester.

“We have revised our 2018 growth forecast for telecom services slightly upward, from 5.6 per cent to 6 per cent. We expect the downward spiral of mobile service prices to come to an end as telecom service providers touch bottom and stabilise prices,” the report said.

Reliance Jio’s IPO plans will further reduce the likelihood of further disruption from telcos. Digital actions of enterprises – providing better connectivity to remote offices, implementing more software, and moving workloads to the cloud – will drive the demand for data services.

Providers like Orange Business Services, Tata Communications and Verizon Business will see an uptick in demand.

However, “we expect enterprises to become cautious in 2019, which will pull back the growth rate,” Sharma said.