India’s AI Boom: Enterprises Set to Spend Big on Digital Transformation in 2026

Artificial intelligence and data-led transformation are emerging as the biggest forces shaping India’s enterprise technology spending, as companies race to modernise digital infrastructure and prepare for large-scale AI adoption.

According to Bain & The company’s “India Enterprise Technology Report 2026,” AI and data transformation initiatives are expected to account for 40-45 per cent of India’s change-related technology spending in 2026.

The report suggests Indian enterprises are entering a strong investment cycle, with overall IT spending projected to grow 6-8 per cent in 2026 — ahead of the expected global growth rate of 4-6 per cent.

“Approximately 40% of 2026 technology budgets are expected to be allocated to change initiatives, with 40%-45% of that change spend focused on AI and data-led transformations, reflecting AI's growing role in enterprise technology investments,” the report said.

Why Indian Companies Are Spending More on Technology

The report highlights that Indian firms are allocating a significantly larger share of their technology budgets towards long-term capability building compared to global peers.

While global enterprises typically allocate 20-30 per cent of technology budgets to capital expenditure, Indian companies are spending 50-60 per cent on capex-driven technology investments.

Much of this spending is being channelled into AI platforms and data modernisation, which account for nearly 30 per cent of capex investments. Other major focus areas include application modernisation and cloud infrastructure.

The findings are based on insights gathered from more than 250 technology and business leaders across sectors in India.

AI Adoption Is Forcing Companies to Rebuild Core Systems

The report indicates that enterprises are no longer treating AI as an experimental technology. Instead, organisations are strengthening foundational systems to ensure AI can be deployed at scale.

“About 60% of CIOs will prioritize high-impact AI roadmaps, alongside application rationalization and data modernization, in the next 12 months,” the report stated.

This shift reflects a broader transition from short-term digital adoption to deeper enterprise transformation, where data infrastructure, cloud systems and modern applications become essential for AI-led operations.

Why Many Businesses Still Struggle to See Results

Despite rising technology investments, the report warns that many organisations are still failing to translate spending into measurable business outcomes.

“Only 15% of business leaders view IT as truly strategic, while 70% rate it as ‘good, but not great’,” the report said.

The study argues that companies must move beyond implementation-based success metrics and instead adopt “outcome-based measures linked to growth, efficiency, and profitability.”

The findings suggest that while AI enthusiasm is high, execution and measurable returns remain significant challenges for businesses.

Legacy Systems Remain the Biggest Obstacle

One of the biggest hurdles identified in the report is legacy technology infrastructure.

“Approximately 72% of CIOs cite legacy tech debt as the top barrier to transformation,” the report noted.

The study also identified shortages in next-generation technology skills and “unproven ROI from new-age tech initiatives” as major concerns slowing enterprise transformation.

These challenges indicate that many companies are attempting to adopt advanced AI tools while still operating on outdated technology foundations.

Bain Calls for a ‘Future-Back’ Approach

Sandeep Nayak, Partner & APAC Leader of the Technology Practice at Bain & Company, said companies need to fundamentally rethink technology strategy in the AI era.

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

The report added that enterprises adopting this “future-back” strategy could unlock “15%-20% absolute EBITDA improvement” through stronger operational efficiency and higher revenues.

Operating Models and Talent Will Decide Success

Nagaraj Gn, Partner & Head of India Enterprise Technology at Bain & Company, said AI transformation will require more than just technology investments.

“We are now in a fundamentally different paradigm where all of these will be key to unlocking value at scale and sustaining the impact of technology investments,” he said.

According to the report, companies will increasingly need to redesign governance structures, operating models and workforce strategies if they want AI investments to generate sustained business impact.

(With inputs from ANI)