Top Indian cos spent Rs. 7123 crore on IT: DQ-IDC survey

NEW DELHI: With an expenditure of Rs. 7123 crore in 2006-2007, top Indian companies increased their Information Technology deployments by 27 per cent over the previous year, says a survey carried out by CyberMedia publication Dataquest and IT research and advisory firm IDC India. The fifth annual Dataquest-IDC MegaSpenders 2007 survey expects 26 per cent more IT spends in the current year taking the combined spend to Rs 8974 crore.

The IT investments by MegaSpenders in 06-07 make up more than one-tenth of the total domestic IT/ITES industry that notched up sales of Rs 68411 crore in 2006. The marginal decline in IT spends projected in 07-08 is due to reduction in costs of IT inputs both software and hardware as the nature and pattern of IT adoption becomes more sophisticated.

The survey covered 226 organizations across 11 verticals.

“The Dataquest-IDC MegaSpenders ’07 survey points to a healthy growth in IT investments beyond the banking, financial services and telecom sectors. Sectors like utilities, automobiles, and discrete manufacturing were equally aggressive in investing in IT,” said Prasanto K Roy, chief editor, Dataquest.

“These IT MegaSpenders of India Inc. set the tone for the domestic market, which had annual growth of 27 per cent for the previous three years. The projected growth at a nearly similar level for this year is great news,” added Roy.

The average IT spends as a proportion of a company’s turnover went up to 0.7 per cent in 06-07 from 0.6 per cent the previous year. The BFSI, IT/ITES sector invested 1.19 per cent and 1.58 per cent respectively in 06-07.

The average IT investment by an ?IT megaspender’ was Rs. 34 crore in 06-07, and is expected to grow by 26 per cent to Rs. 43 crore this fiscal. Interestingly, more than half the top 50 spenders on IT during 2006-07 were PSUs.

BFSI, Telecom sectors spend big

The IT investment of Rs. 2646 crore by 35 banks, financial institutions and insurance companies was the highest with Top 15 from the sector making it to the Top 50 in the survey. The BFSI sector is expected to remain the highest spender in 07-2008 with investment of Rs 3368 crore.

The telecom sector comprising firms like Aircel, Bharti, BSNL, Hutch, MTNL, Reliance Communications and VSNL, pumped in Rs. 2314 crore on IT during 06-07, making the highest average IT investment of Rs. 289 crore for each company.

The sunrise IT and ITES sector invested Rs. 652 crore during the last fiscal. This resulted in 23 mega spenders, including MphasiS, NIIT, TCS, Wipro from the IT and ITES sector investing an average of Rs. 34.32 crore.

While the mega spenders will increase their IT spend by 26 per cent in the current year, sectors like Retail, Utilities, Telecom and BFSI will invest at higher rates.

Retail sector is expected to increase its IT spends by 41 per cent while the Utility, Telecom and BFSI are expected to grow at 35 per cent, 31 per cent and 27 per cent respectively.

Hard purchase

Overall, about 42 per cent of the total spend on IT was on hardware while expenditure on packaged software and services software stood at 26 per cent each. Within hardware more than half the expenditure was on PCs, notebooks and servers, while system software and application software accounted for more than half of spend on software. However, more than 40 per cent of the services spend was on support and maintenance.

Most of the organizations are likely to continue invest on Mail Messaging solutions, Security and Wide Area Networks (WAN).

Next year, business specific applications like core banking in BFSI, engineering applications in automobile and implementation of ERM and CRM across verticals would be the drivers of IT spend, the survey says.

The growth in IT expenditure by the retail sector was relatively low-key last year, but is expected to perk up in 07-08 as companies like Reliance, Pantaloons, Tatas plan to expand. Enterprise applications like ERM and CRM are expected to be in vogue.

The slowest growth is expected from the oil and petrochemicals sector that is likely to invest a total of Rs. 455 crore, up 6per cent from Rs. 429 crore invested in 06-07.

© CyberMedia News