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Rapid changes in Indian ICT landscape: Gartner

Special Correspondent

Market set to reach $24 b by 2011 constituting 2 p.c. of GDP

Firms are spending their budgets more on hardware and software than people
India’s structural cost advantage is eroding, given the upward pressure on local wages

MUMBAI: The information and communications technology market in India is estimated to grow at a five-year compound annual growth rate (CAGR) of 20.3 per cent to reach $24.3 billion or nearly two per cent of the country’s gross domestic product (GDP) by 2011, according to Gartner Inc.

Released at a curtain raiser to the Gartner India CIO Summit, the study says that this growth will be driven by Indian chief information officers (CIOs) continuing to build and consolidate the basic IT infrastructure, in addition to small and midsize businesses (SMBs) increasingly leveraging technology to drive business growth and efficiency.

According to a Gartner release, based on the findings of the Gartner EXP Worldwide Survey of CIOs, Indian firms report stronger than average IT budget increases of around 13 per cent versus the world average of 3.3 per cent for 2008. This increased spending by Indian CIOs is directed primarily towards building new business capabilities, with 30 per cent of IT spend allocated for business growth and 19 per cent towards business transformation.

Offshore IT services

The Indian IT landscape is evolving rapidly, driven by forces from a number of different directions, including continued growth in the offshore IT services sector, but increasingly augmented by strong domestic ICT growth. Almost all industries in India are seeing strong growth which, in an increasingly resource-constrained environment, and are trying to manage by rapidly improving their IT infrastructure.

Budget allocations

According to Gartner, Indian firms are spending their budgets more on hardware and software than people. This is significant as Indian firms continue to build out their infrastructure. Indian enterprises will be investing heavily in bringing the base infrastructure, long underinvested, up to global standards to meet the growing needs of the business. These allocations will change over time as the infrastructure matures. The HR component of the IT budget will grow as the emphasis shifts from implementing standard (generic) solutions to creating unique products and services. At present, CIOs in India are focused more on generic IT than distinctive solutions required to drive growth.

Partha Iyengar, Head, Research – India, Gartner, said, “as the Indian economy continues to experience steady growth, most sectors have to deal with rising consumer expectations and competition — at domestic and global levels. Furthermore, India’s structural cost advantage is eroding, given the upward pressure on local wages and the weakening of the U.S. dollar. Hence, it is a business imperative for Indian companies to meet the demands of domestic competition and to offer value propositions that are attractive to offshore customers. In this context, Indian companies have to create distinctive solutions using IT to transform their business and garner a competitive edge.”

New skills, new roles

“To create distinctive solutions, Indian CIOs need to extend their strategies, metrics, personnel and leadership approaches,” said Mr. Iyengar. “They must recognise how the enterprise needs to change to serve customers in unique ways, generate operational returns and develop new products and services. These are the areas in which IT can make the difference. Making the difference will require new skills, roles, and relationships within the enterprise, and new approaches to delivering business-relevant solutions.”

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