Top 50 Indian enterprises are aggressive on IT investments in FY 2013 despite the decline in dollar revenues, says a new report from Zinnov, a globalization advisory firm.
Over 30 percent of IT spend is aimed at transformational projects, especially in the areas of mobility, cloud and big data.
The Zinnov study revealed that while ~50 percent of the CIOs of these firms are focusing on mobility, private and public cloud investments in FY2014, big data is their top priority for over 60 percent of the firms, driven by manufacturing and media companies.
The top 50 Indian companies – selected on the basis of total annual income excluding IT companies – demonstrated growth at a CAGR of 12 percent in INR terms despite economic challenges in FY13, even though revenues declined marginally by 1 percent in USD terms.
Interestingly, 10 percent of the top 50 are headquartered outside the Tier 1 cities, in emerging locations such as Indore, Jamnagar and Dehradun. Oil & Gas was the only sector that made significant capex investments, while this remained flat or declined for other industries in the top 50 such as metals and mining, BFSI, telecom and power.
While the growth story remains positive, profit margins at these firms have been low, affected by regulatory issues that 50 percent of the firms quoted as a reason for business volatility, the report said. In fact, EBITDA margins of the top 50 have demonstrated a steady decline over the past three years, from 16.5 percent in FY11 to 13.7 percent in FY13.
Further, 60 percent attributed uncertainties in the global economy, while they also faced margin pressures from overseas investments and domestic expansion projects.
Expansion and growth are key priorities for the top 50 players. Automotive companies are focused on entering new markets, expanding product range and increasing product quality/innovation, while those in metals and mining are aiming at capacity expansion, new market entry and quality refinement. The rural and domestic markets are key focus areas for FMCG and BFSI firms.
In a sign of their commitment to new market expansion, many of the top firms have already gained international recognition and are among the world’s leading companies in their respective industries. The released study predicts that India will have over 175 Indian companies in the global list of top 2000 companies by 2020.
Technology acts as a key driver of growth and a strategic business enabler, with focus areas being real-time information processing to drive critical business decisions, consolidation and big data analytics to develop new use cases, increasing efficiencies and creating a unified customer view across operations.