And while still delving on the fact that projected IT spend can reduce next year, Sunil Kapoor, director, Central Buying, Fortis Healthcare suggests another plausible reason. The IT spending for most organizations is moving from a capital expenditure towards an operating expenditure and this could account for the slight tapering off in actual spending. "This is positively a sign of maturity for most Indian enterprises," observes Kapoor.
"The adoption of IT keeps increasing and becoming more sophisticated. But due to reduced IT costs, the growth in spend might show a slight decline"
"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"
Tuteja in fact devises a thumb rule to gauge the IT spending pattern of India Inc. "According to a global estimate, in case the ratio of capex to opex on IT is 40:60, or in other words, the capex on IT is less than 40%, the company is still considered to be a high spender on IT." Going by Tuteja's formula, most Indian organizations can still be categorized as mega spenders on IT, even as their expenditure gradually move towards the opex side.
Last but not the least, both Sanjay Singh, head IT, Timex Watches and Tuteja argue the fact that since the DQ-IDC Megaspenders 2007 survey includes most of the organizations in the ET500 list (implying mostly listed companies), they are mostly mature on the IT adoption curve. This too can explain, to a certain extent, why expenditure on IT can dwindle next year.
Tracking the Spend
However, Kapoor is not so optimistic as he feels that majority of the spending under services category still comes from AMC contracts. Indian enterprises are still looking at IT investments more from the IT consultancy perspective than business consultancy preview (read, business changes). Some big-ticket deals in recent times have signified that India Inc is slowly starting to move towards a model of asset stripping, where device-based resources are outsourced from the traditional model of facilities management. But at the same time, the fact that 42% of services spend is still constituted of support and maintenance is a major dampener.
Some interesting facets emerge even within the hardware and software spending areas, especially for global MNCs that have significant presence in India. In case of global companies, either they do not pay the software license fees in India (parents have global contracts with software vendors) or they obtain major discounts on license prices as per global negotiations. Hardware costs also often involve bundled cost of both the boxes as well as operating systems.
"The IT spending for most organizations is moving from capital expenditure towards operating expenditure, and this could account for the slight tapering off in spending growth"
"Since the DQ-IDC Megaspenders 2007 survey includes most of the organizations in the ET500 list (mostly listed companies), they are mostly mature on the IT adoption curve. This could explain why IT expenditure growth might marginally decline next year"
Presently, mail messaging solutions, security and WAN are the most commonly used technologies by organizations, and in future most of them would continue to expand on the deployment of the above-mentioned technologies across organizations (breadth and depth). Line of business specific application like core banking in BFSI, engineering applications in automobile and implementations of ERM and CRM across verticals are some of few technologies that would be the drivers of IT spend next year.
The "Dataquest-IDC Mega Spenders 2007"- A Study among large enterprises in India" is compiled on the basis of a methodology jointly decided by IDC India and Dataquest. The IDC team was led by Shailendra Gupta who was assisted by Satya Sundar Mohanty and Shakyadev Mitra.
The objective of this year's DQ-IDC Mega Spenders Survey 2007, like the last four years, was to find the top IT spenders in FY 2006-07, both in terms of individual organization as well as across various sectors. In addition, the survey also intended to assess the IT investment pattern during the year; and plans for future investment during FY 2007-08. On the basis of the set objectives of the research, Dataquest commissioned IDC India to undertake a large-scale quantitative survey across various cities in the country. The survey involved face-to-face interviews with CIOs or IT heads of organizations across different sectors. Following the survey, Dataquest organized a close-door meeting of a few leading CIOs and analysts to discuss the survey findings. A preliminary list was prepared on the assumption that companies with higher revenues would probably spend more on their IT infrastructure. The sample list included more than 200 large enterprises from ET500 & BW500 lists, and the key players from banking, technology, and related verticals-with traditionally high IT spend. IDC administered the questionnaire to 222 companies who participated in the survey, while a few questionnaires were rejected either while validating the data or due to logical errors in the data. One obvious problem faced by the survey was that while the final analysis was based on a sample size of 211, at least 15 large traditionally heavy IT users refused to participate. However, for authenticity of the survey, the IT spends by these companies have been estimated by IDC from secondary sources and projections from previous surveys to determine the overall spending graphs and tables. For individual trends, the survey has stuck with the 211 participating respondents. Those missing from the survey include the likes of TCS, HDFC Bank, Reliance Communications, BSNL, Bharti, Tata Steel, Maruti Udyog, and Dr Reddy among others.
Utility:
Rajneesh De rajneeshd@cybermedia.co.in Graphix: Paras Jain
Get most out of your technology infrastructure investments with Dell
About CIOL | Media Kit | Site Map | Contact Us | Help | Write to us | Jobs@CyberMedia | Privacy Policy
Copyright © CyberMedia India Online Ltd. All rights reserved. Usage of content from web site is subject to Terms and Conditions.