Specialize to survive the sluggish IT spend

BANGALORE: The much-talked about industry recovery has not really happened. The days of double- digit growth are over and worldwide IT spend actually fell by 4.1% during 2001-2002. However, according to Pradeep Gupta, Chairman & MD, IDC India, there is hope yet. “Outlook for the next three to four years suggests there is a good possibility of a steady 6% to 7% growth in the market,” he said.

Inaugurating IDC’s annual event — IDC Directions — here on Wednesday, Gupta said, “There are certain trends in the market that IT firms need to watch out for — both in the short term and the long term.” The short-term trends include: changes in buying cycles, containment of costs, increasing complexity, segmentation of the market and the importance of communicating the right message.

According to a study done by IDC, IT buying and decision making was now no longer restricted to the CIO and has begun to include functional heads and business executives. In fact, with two-thirds of the decision-making being non-CIO driven, the vendor will have to address a larger constituency to make a sale now, said Gupta.

Gupta also stressed on specialization. “Segmentation is a very vital element of the trends that we are discussing for the future. IT companies which provide solutions for specific verticals might end up better off than companies that offer a whole lot of general applications,” he said. Internationally, the key verticals where industry specific solutions are likely to be key are healthcare, utilities, transportation and telecom.

Speaking on the long-term trends that could change the market, Gupta said, “The Internet is set to grow steadily and by 2006 is expected to have around one billion users. Transaction on the net will touch $6 trillion by that time. With such numbers, the Internet becomes a vital piece of the IT growth opportunity.” In addition, wireless is all set to grow and reach 3 billion cell phones with 50% of the people on the Internet being mobile and 50% of telecommunication revenue coming in from wireless. Embedded technology with personal gadgets and converged devices also offers tremendous growth opportunities for IT products and services in the near future.

According to Gupta, integration will become a larger area in the future though there were only 1 out of 10 web sites that were connected to back end systems and 1 out of 50 sites which were connected to other company systems now. Globalization and thereby localization services and translation software among others are other growth opportunities.

“All these various growth segments will bring about new opportunities for IT growth in the future. One also has to keep in mind that apart from these industries, every other part that works as an enabler for each of these industries will also grow,” said Gupta.