Yet, the fact is that hardly anyone can ignore the growing trend of automation across Indian enterprises. Not only has it led to more sophisticated usage of IT by Indian organizations to conduct their businesses, but, more importantly, it has resulted in increasing spends on IT across sectors. And while the annual reports of companies might fall short in tracking this growing expenditure on IT, the task has been undertaken eminently by the DQ-IDC Megaspenders Survey.
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| Source: DQ-IDC Megaspenders Survey 2007 |
This year has been no exception, as the survey has tracked the pattern of spending on IT by various Indian organizations during 2007. However, with changing times, maintaining the nomenclature of the survey as Megaspenders might not remain politically correct too long. In these days, when corporate fiscal discipline has become sacrosanct to any organization's well being, it is undeniable that many CIOs would flinch from publicly proclaiming themselves as megaspenders.
It is probably this perception of the stigma of negative connotation that has prevented the likes of HDFC Bank, LIC, Hutch, ONGC and a few other leviathans from participating in the DQ-IDC Megaspenders Survey 2007. Not just them, many of the CIOs from the 211 organizations that responded have desisted from allowing us to divulge their IT spends for the year. In light of this scenario, we have decided to only list down the Top 50 organizations with the highest IT spends, but not publish the exact expenditure figures.
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IT spending records a healthy 27% growth in 2006-07. Though growth may decline marginally to 26% this year due to reduced IT costs, the nature and pattern of IT adoption is becoming more sophisticated.
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Over half the Top 50 spenders on IT during 2006-07 are PSUs. The myth is busted: that most modernization processes such as automation and IT deployment can take place only after privatization
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While BFSI and telecom continued to show steady growth, utility, automobiles, and discrete manufacturing stole the show in 2006-07 with increased investment on various modes of IT; retail was low key last year, but projected to really zoom up in FY '08
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The surveyed organizations have an IT spend per employee of Rs 34,000, nearly double of those surveyed last year (Rs 20,000), with several companies with a lower employee base having come into the top 200+ surveyed.
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Up or Down?
Interestingly, the survey projects that the average industry spending on IT would record a 26% growth in FY '08 to touch Rs 42.94 crore. This poses the important question: Does the projected reduction in growth by one point signifies that IT spending by India Inc is gradually plateauing? A couple of CIOs and analysts we asked for corroboration, however, refused to take the bait.
Both Akhilesh Tuteja, executive director, Advisory Services, KPMG and Hilal Khan, head, Corporate IT, Honda Motors India desist from reading too much into this drop in IT spending. Instead, they both account it to the increasing reduction in costs of IT, both for hardware as well as software. "The adoption of IT is not coming down, rather it is becoming more sophisticated, but due to reduced IT costs, the absolute spends might show a decline," says Khan. For the same price, today, an organization is able to pack in much more IT power than it could have done a few years back.
Coupled with the fact that average IT spend as a proportion of the company turnover too has gone up from 0.6 to 0.7, the veracity of what the CIOs feel gets established. The fact that IT adoption has just not increased, but it has become more sophisticated and democratic (spread across all hierarchies) puts to rest any apprehension about IT spends petering off in the near future. "The configuration of IT equipment that can be purchased at the same value has gone up significantly," asserts Tuteja.
