Indian enterprises are expected to sharply increase technology investments in 2026, with artificial intelligence (AI) and data transformation emerging as the biggest drivers of spending, according to a new report by consulting firm Bain & Company.

The report estimates that IT spending in India will grow 6%-8% in 2026, ahead of the 4%-6% growth expected globally, as companies accelerate modernisation efforts and prepare for AI-led business transformation. 

Bain said around 40% of enterprise technology budgets in 2026 will be allocated toward change initiatives, and nearly 40%-45% of that spend is expected to go toward AI and data-led transformation projects. 

Must read: AI layoffs may hurt companies too, not just workers: Study warns of ‘automation trap’

The report highlighted that Indian companies are now shifting from incremental digital upgrades toward large-scale technology reinvention. 

“Indian enterprises are entering a new phase of technology investment where the focus is shifting from how much is being spent to how effectively that spend creates business value,” said Sandeep Nayak, Partner & APAC Leader of the Technology Practice at Bain & Company. 

“At a time when AI is accelerating the pace of change, it is no longer only about modernising technology stacks or addressing technical debt. Now is the time to go ‘future back’ and reimagine the enterprise,” he added. 

Capex push accelerates

The report noted that Indian enterprises are allocating a significantly larger share of budgets toward long-term technology capability building compared to global peers.

According to Bain, capital expenditure now accounts for 50%-60% of enterprise technology budgets in India, versus 20%-30% globally. This translates into technology capex levels that are roughly 2.5-3 times higher than international counterparts. 

A large part of this investment is being directed toward AI platforms and data modernisation, which account for nearly 30% of capex allocation. Core application modernisation and cloud infrastructure each account for another 25%, while cybersecurity represents around 20% of spending. 

Must read: AI regulation in India becomes strategic priority as enterprise adoption rises

The findings come at a time when enterprises globally are racing to embed generative AI into workflows, automate operations and modernise legacy systems.

Bain said nearly 60% of chief information officers (CIOs) in India plan to prioritise high-impact AI roadmaps, application rationalisation and data modernisation over the next 12 months. Cybersecurity modernisation has also emerged as a key focus area for about half of the CIOs surveyed. 

Gap between spending and business value

Despite the rise in technology spending, the report warned that many organisations continue to struggle with translating investments into measurable business outcomes.

Only 15% of business leaders surveyed said they view IT as “truly strategic,” while nearly 70% described their technology functions as “good, but not great.” 

Bain said this disconnect highlights the need for enterprises to move away from implementation-based metrics and instead measure technology success through business outcomes such as growth, profitability and efficiency gains. 

The report also identified legacy technology debt as the biggest obstacle to enterprise transformation, cited by 72% of CIOs. Skill shortages in next-generation technology areas were flagged by 57% of respondents, while 49% pointed to unproven returns on investment from emerging technology initiatives. 

Must read: India is racing ahead in AI adoption, but falling behind where it matters

Additionally, around 90% of business leaders said their current data foundations and AI maturity levels are insufficient to support enterprise-wide AI deployment at scale. 

Without major changes in operating models, talent strategies and data infrastructure, Bain warned that the current investment cycle could risk “creating the legacy tech of tomorrow.” 

‘Future-back’ approach

The report argued that enterprises adopting a “future-back” strategy, where companies redesign operations and technology architecture around long-term AI-driven business models, could unlock significant gains.

According to the report, leading organisations could potentially achieve 15%-20% absolute EBITDA improvement through a mix of efficiency gains and revenue growth. 

“An incremental, step-change approach to technology strategy will not help deliver maximum impact from AI investments,” said Nagaraj Gn, Partner & Head of India Enterprise Technology at Bain & Company. 

“Technology CXOs must rethink their technology architecture, governance, operating model, skill mix and IT partner engagement models with a ‘future-back’ approach,” he added. 

The report also noted that enterprises will increasingly need to prepare for a new operating environment shaped by AI agents, AI-powered cybersecurity threats and the rise of quantum computing capabilities.