What awaits India’s IT spending

tablet user
IT and software companies operating in India feel so much encouraged with the current government’s Start-up India, Smart City, Digital India and Make in India missions.

However, results of recent research reports indicate that India’s IT spending  growth would slow slightly this year, but would rebound from next year.

Gartner forecasts India’s IT spending to grow 7.2 percent annually, to reach $72.3 billion in 2016.

IDC forecast is a bit more optimistic compared to Gartner, with the estimated growth rate at 8 percent. However, it is down from 13 percent growth achieved in 2015.

Major technology companies: IBM, Cisco Systems, Dell, HPE, Oracle, Huawei, Juniper Networks, Brocade Communications, among others, will benefit from the growth in India’s IT spending.

Huge expectations

Gartner says spending on Internet of Things (IoT) hardware will exceed $2.5 million every minute in 2016.

Connectivity of the rural area is one of the visions of the government under its Digital India initiative. If the BJP government initiatives prove fruitful, then the rural-urban gap would be bridged, enhancing the economy.

It seems Google has taken initiatives on this part with its balloon-based Internet technology Project Loon plans. News reports were out that the internet giant is in talks with local telecommunications providers.

The research firm says data center systems will grow 3.9 percent in 2016, with most of this growth coming from enterprise network equipment and servers that will grow at 5.9 percent and 5.3 percent, respectively.

In October last year, IBM opened its first public cloud data center in India. Located in Chennai, the IBM Cloud data center offers local customers and end users increased performance and speed for data traveling to and from the region.

This data center is part of IBM’s $1.2 billion investment to expand its global cloud footprint into every major financial market.

IT services, which accounts for 18.1 percent of overall IT spend in India, will be the fastest growing segment in India in 2016 with 13.8 percent growth year on year. Within these segments, business IT services will grow 15.2 percent over 2015 figures.

Tata Consultancy Services recently opened a new office in Toronto to provide a new hub for technical innovation, partner collaboration and industry leading client service. According to media reports, the company have plans to hold major share in robotics and 3D print prosthetics.

Software, which accounts for nearly 7 percent of IT revenue in India, will grow 12.7 percent as a segment.

Within this segment, Gartner said, enterprise application software will be the fastest growing sub segment in 2016, with revenue forecast to grow 16.2 percent over 2015.

Communication services will continue to account for the largest share of IT spend in India and will account for 39.2 percent of revenue in 2016.

Research and outsourcing advisory firm ISG says Indian IT industry is likely to get $100 billion worth contracts from renewal during 2016-17 from customers including Deutsche Bank, UBS, Mitsubishi and Vodafone.

The IT companies involved include major players like TCS, Wipro, Cognizant and Infosys.

Growth drivers in 2016

Gartner expects digital business and an environment driven by a connected world will move the industry.

Pre and post budget comments from Indian IT firms certify Gartner’s observation. Most of the companies have said they feel the business environment is encouraging and government’s efforts to project India as a capital investment hub and business-friendly destination are turning favourable for the country.

Meanwhile, IDC says the 8 percent growth in spending would come from software and services.

Rebound expected

IDC noted that India will rebound to double-digit growth in 2017, and will represent an increasingly vital source of growth for global IT suppliers over the next five years.

India’s expected rate of growth will see it overtake Australia and Canada to enter the top 10 largest IT markets by 2020.

Aman Munglani, research director at Gartner said India will continue to be the fastest growing IT market for the second year in succession and will continue growing to total $87.67 billion by the end of 2019.

According to Gartner, India is currently the third largest IT market in Asia Pacific, and by 2019 India will become the second-largest IT market within the Asia/Pacific region, following China.

Devices, which include mobile phones, PC’s and tablets, will account for almost 33 percent of the overall IT spend in India, and the devices  segment will grow 9.4 percent in 2016.

Mobile phones will continue to be the single largest technology sub segment in India and the third fastest-growing through 2019.

Digital Business

India’s Communications and IT Minister Ravi Shankar Prasad has said that Digital India will be a $1 trillion business opportunity and it will combine the requirements of the telecoms, IT and ITeS and electronics manufacturing sectors.

Gartner said businesses are shifting to digital revenue from digital business as analog revenue flatten many other industries see declines.

“Leading CEOs have told Gartner that their digital revenue will increase by more than 80 percent by 2020. 125,000 large organizations are launching digital business initiatives now, “said Mike Harris, group vice president at Gartner.

Security and Risk

Gartner said the risk and security officer currently is concerned with old technology risks. They’ve become obsessed with external hacks, chasing the impossible goal of perfect protection. However, 65 percent of CEOs say their risk management approach is falling behind.

Gartner predicts that by 2017 the typical IT organization will spend up to 30 percent of its budget on risk, security and compliance, and will allocate 10 percent of their people to these security functions. That’s triple the levels of 2014.

Recent F-Secure threat round-up report revealed that India has emerged as the fifth largest country that has witnessed infections via DNS hijacks in 2015.

Arya MM