Indian IT market to exhibit strong resilience during turbulent times

NEW DELHI, INDIA: India’s IT spending is expected to grow at an annual rate of 14.1 percent in 2009, down from 18.1 percent in 2008, predicts Springboard Research.

According to Springboard’s latest executive brief: India IT Market Predictions 2009, IT spending in verticals like retail and real estate will be hardest hit, while the advent of 3G and a largely protected financial system will help sustain growth in the telecom and banking/finance verticals respectively.

In addition, government initiatives to spur economic growth and increase spending on public security and national defense, coupled with rural sector initiatives should include outlays for new technology in the years to come.

“With the economic crisis expected to further worsen, we will see IT spending affected in India – although not to the same degree as in North America, Europe and other Asia Pacific markets like Japan, Australia and Korea,” said Manish Bahl, Research Manager, Springboard Research. “On the other hand, the country had delivered impressive growth and profits to both leading multinational and domestic vendors last year, and for many of these vendors, their Indian revenues grew more than 50 percent in 2008,” added Bahl.

 Springboard predicts the top 10 trends that will shape the IT market in the India in 2009 are:

1) Arrival of 3G unlocks enormous opportunities for IT vendors

2) Cost concerns will drive a key focus on IT infrastructure consolidation

3) Economic pressures to drive SMBs towards outsourcing and SaaS

4) Start-ups and smaller firms become more important accounts for IT vendors

5) Virtualization will gain traction in medium and large sized enterprises

6) IT outsourcing will be seen as a catalyst to HR retention and cost reductions during the economic squeeze

7) Media and entertainment (M&E) industry to transform further with new technologies

8) Online advertising markets to gain momentum with the emergence of niche social networking sites and regional portals

9) The public sector will buoy IT spending

10) Green IT will be fueled by cost efficiency benefits

 Indian enterprises will be more focused on their 'core' areas to foster specialization and this will increase their dependence on technology to reduce operational expenditure. Also, the increased use of the Internet and IT will continue driving infrastructure requirements that will create new opportunities in the Indian market.

“Albeit in a slow pace, SMBs will also play their part to drive the market and this is well supported by the changing attitude of Indian companies to view IT as an investment,” continued Bahl.

According to the Springboard’s brief, the current economic slowdown will trigger a new kind of competition in the market as enterprises focus more on RoI calculations, enhanced planning and extended involvement of the IT vendors. The ongoing crisis will provide a platform for Indian companies to be more productive and gain a level of maturity from both the business and IT perspective.

At the end of the crisis, India is expected to emerge as a more sophisticated IT market that plays a bigger role in the overall Asia Pacific IT market.

“While major multinational vendors continue to view India as a critical growth market, we expect other US-based firms to amplify their resource influx into the region and set up special teams to focus only on emerging markets such as India,” Bahl said.