Indian firms are increasing their IT budgets an average of 13% this year, far more than the global average of 3.3%, says research company Gartner.
The country's domestic IT market is also forecast to grow at a five-year compound annual growth rate (CAGR) of 20.3%, reaching US$24.3 billion by 2011.
While there are fears of a global recession, India is showing rapid growth, says Peter Sondergaard, global head of research at Gartner.
The increased spending by Indian CIOs is directed primarily towards building new business capabilities, with 30% of IT spending allocated to business growth and 19% to business transformation, Gartner says.
Indian enterprises will make heavy investments in bringing the base infrastructure up to global standards, says Partha Iyengar, Gartner's head of research in India.
A key problem for Indian CIOs is attracting and retaining quality staff, as they are competing with Indian and multinational IT services companies, Iyengar says.
India's IT services market is forecast to grow to US$10.73 billion by 2011 at a five-year CAGR of 23.2%, propelled by Indian companies that are outsourcing some of their work to other Indian and multinational companies due to staff shortages, Gartner said in January.