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Global IT growth will be halved: IDC

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CIOL Bureau
New Update

BANGALORE, INDIA: The global ICT market intelligence firm, IDC India, a subsidiary of CyberMedia, predicts that the global IT growth will be cut in half and it would take three years to come back.

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According to the much awaited annual IT/ITeS market forecast, ‘India Domestic IT/ITeS Market Top 10 Predictions for 2009’, global IT spending will decrease to 2.6 per cent in 2009 – half of 2008’s 5 per cent and far below 2007’s 7 per cent growth rate.

This decline is the result of the dramatic slowdown of global GDP. The report also says the domestic Indian IT/ITeS market will grow at 13.4 per cent in 2009, the slowest since 2003. The growth rate was 17.3 per cent in 2008.

It also suggests important structural changes taking place on the back of a global economic meltdown will propel a new ‘market order’ in the domestic Indian IT/ITeS industry.

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This new ‘market order’, termed as Growth Phase 2.0, will be quite different from the earlier phase, Growth Phase 1.0 (2003-08), during which the domestic market witnessed unprecedented growth. During 2003-08 the market size nearly tripled from Rs. 34,000 crore in 2003 to Rs.1,01,031 crore in 2008, a CAGR of over 24 per cent.

This will come down to 16.4 per cent in the coming five years till 2013, said a press release. The domestic IT market is expected to grow at 11.4 per cent in 2009 to post Rs. 1,04,937 crore, while the domestic ITeS market will post revenues of Rs. 9,637 crore, a growth of 40.8 per cent. In 2008, this was 15.4 per cent and 53.2 per cent respectively.

The Growth Phase 2.0 will leverage the IT infrastructure built and consolidated during Growth Phase 1.0. Growth Phase 2.0, expected to evolve 2009 onwards, will be built on the back of new and innovative services sought by consumers and enterprises alike, the report said.

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"It’s not only the end of another year; it’s also the end of a business cycle, that began in 2003,” says Kapil Dev Singh, country manager, IDC India.

“2009 shall herald the beginning of a new business cycle that will be marked by slow growth in 2009 but would eventually be the basis of a new phase of growth. The issues in the short run, more pronounced throughout 2009, will be productivity, cost savings and customer retention,” he added.

Singh said this would eventually pave way for innovative services (for both consumers as well as enterprises) by leveraging the existing infrastructure built so as to align with emerging opportunities.

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However, India would be the fastest growing market in APAC, followed by China, Vietnam, Thailand and Philippines.

It also said telecommunications sector IT spending growth will be fastest, as the sector would have higher than average growth rate and will be the least impacted by slowdown.

According to IDC the economic slowdown will further increase and accelerate the adoption of outsourcing services by the Indian enterprises.

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