Executive summary

Over the past three months, researchers within Bain & Company spoke with and surveyed more than 250 CIOs, CDOs, CAIOs, and CXOs across enterprises in India, spanning multiple industry segments. We wanted to understand their current strategic direction—and how they are prioritizing for the future. The voices of Indian tech decision-makers are summarized in this report, which will become an annual effort.

In this first edition, we learned:

India Inc. is in the midst of a technology spending surge

Indian enterprises are spending 150–200 basis points (bps) (as a percentage of revenue) more on IT than their global counterparts. IT spending is likely to increase approximately 6%–8% in 2026, which is 200–250 bps higher than projections for global peers. Spending has surged over the last 12–18 months and will likely continue for the next 2–3 years.

Why the surge? The need to reduce technical debt is long overdue. This is evident in the share of capital expenditure (capex): Capex is 50%–60% of IT budgets in India, compared to only 20%–30% for global peers. A majority of the spending is going toward data modernization and AI infusion (30% of capex and 40%+ of change in spending); core application modernization (25% of capex); cloud adoption and IT infrastructure (25% of capex); and cybersecurity (20% of capex). Indian enterprises are modernizing the entire IT stack all at once.

A downstream consequence will be a marked increase in cloud penetration in India, with both data real estate and applications shifting. In the US, for example, application shifts have slowed, while a data shift is currently underway.

Spending surges are required but could accelerate current investments toward “legacy of tomorrow” unless a change in approach and operating model is embraced as part of the transformation

We have seen similar spending surges before, often within industry verticals or as a country-specific phenomena, such as the increased spending on modern core/service-oriented and middleware applications in the early 2000s, driven by the banking sector in India and the post-Covid digitalization seen across the world. For many companies, these bursts of IT spends created technology platforms that seemed modern and futuristic but lost their edge and became “legacy” within 3–5 years. Indian enterprises currently have the right spending priorities, but given the pace of change, the risk of “creating legacy tech of tomorrow” is real.

There are early signals that this could happen. This spending surge has been in play for 12–18 months, yet a gap remains between business expectations and the value delivered from technology investments. Only 15% of business leaders we surveyed see IT as truly strategic. Another 70% view IT as good, but not great.

Based on conversations with industry leaders over the last 1–2 years, sentiment has moved in a positive direction, but there is room to do more. The positives and negatives of IT investment remain eerily similar. Leaders told us:

What is working: IT is more scalable and agile than before; business as usual operations are more stable, and there are higher levels of automation.

What needs to improve: Three out of four leaders cited a lack of alignment between business unit and IT goals and KRAs. Even more leaders (about 90%) said their current data foundations are weak and not fit to scale. Talent and capability were also flagged for improvement, particularly in next-gen areas such as data and agentic workflows. Leaders also described proof-of-concept (PoC) fatigue stemming from low- to no-value realization, particularly for AI PoCs.

The leaders we spoke to realize the task ahead is difficult and are proceeding with caution. Approximately 70% said the technical debt of legacy systems will take significant time to overcome. They are also concerned about their ability to acquire or build the right next-generation skill sets, either internally or through tech services partners. They acknowledged that ROI for new technology initiatives remains largely unproven.

India’s enterprises need to build today-forward and future-back simultaneously

Businesses will always have unmet IT needs. These are often well documented and help define IT strategy, architectural choices, and downstream execution. We call this “today-forward.” In this era—where AI is and will remain the defining disruptor—this approach is likely becoming outdated.

AI is still nascent and advancing rapidly. But for many enterprises, there is already fatigue from the proliferation of PoCs that haven’t delivered tangible ROI. At the same time, a handful of enterprises are starting to see dramatic success and could achieve 15%–20% absolute EBITDA improvement (accounting for revenue growth and efficiencies). These companies follow a “future-back” approach. It’s defined by:

The starting point: Multifunctional teams spanning business, tech, risk,
and compliance completely reimagine business functions and processes to dramatically improve outcomes (e.g., revenue, time, cost, quality).

Prioritizing, planning, and committing to change: Initiatives are prioritized by
risk-adjusted value and ROI. Teams account for failure risks, data challenges, technical debt, and short shelf lives before they define execution pathways and commit to outcomes and milestones.

Refine downstream technology roadmaps: Having a clear set of requirements (today-forward and future-back) allows the technology organization to define downstream technology strategies and architecture (e.g., for apps, AI, data, infrastructure, and security). Execution roadmaps are aligned and inform build-buy and partnership choices and ways of working.

Shared vision, common goals, and performance management: Multifunctional teams work together to achieve defined value from a future state of processes within a modern AI ready governance framework that focuses on removing constraints, enables continuous improvement, and evolves to accommodate technology and regulatory changes.

Following this approach, companies often pivot toward a completely different end-state architecture—perhaps scaling systems of intelligence or data-as-a-product, or platformizing AI—while thinning down existing cores and retiring technologies that no longer deliver value. Consequently, budgetary allocations have shifted away from core system replacements executed solely by IT, towards a completely new ways of working with the business to deliver holistic impact.

This is the right time for Indian companies to direct a meaningful part of their business and technology brain-trust, to think “future back”, and to reshape existing transformation initiatives, if required.