CIOs Look For New Ways to Optimize IT Spending

by CXOtoday News Desk    Dec 31, 2013

IT spending

After a sluggish growth in 2013, IT spending among Indian businesses is expected to rebound in 2014, with more CIOs increasing focus on cost control and driving efficiency. As a result of which, CIOs are looking at new ways to optimize IT spending, believe analysts.

A recent report by research firm Coeus Age predicts that IT spending in India may grow at 9.7% and touch Rs 1,51,728 Crore in 2014 as companies are increasingly investing in newer technology to control costs, drive efficiency and ensure organic business growth.

 “After a very sluggish growth in 2013 - the lowest since 2002 - the year 2014 is expected to see the beginning of a new growth trajectory,” says Kapil Dev Singh, Coeus Age Founder. He believes that newer technologies such as cloud computing and enterprise mobility and devices such as tablets would trigger spending in the enterprise in the coming year.

“This is a significant market opportunity which opens the door for rapid revenue growth for IT vendors of all hues,” said Jaideep Mehta, country general manager at IDC India. “We specifically see rapid growth in three growth vectors: emerging tier II and III cities, emerging segments such as the upper mid-market, and emerging verticals such as education and healthcare”.

Similarly, researchers observe an increased technology investments by banks, telecom operators and insurance companies in the next one year.

After a very sluggish growth in 2013 - the lowest since 2002 - the year 2014 is expected to see the beginning of a new growth trajectory. 2014 is the year of general elections at the Centre and with the new government formation being just six months away, the hope of revival will be natural.
-Kapil Dev Singh, Coeus Age Founder

Gartner’s prediction was also optimistic though not as upbeat as the Coeus Age research. Last month, the research firm predicted that IT spending in India is expected to reach $71.3 billion in 2014, a 5.9% increase over 2013 forecast, with businesses prioritizing areas such as mobile, cloud computing and analytics, it said.

IT services will record the strongest revenue growth at 12.1 per cent, while software revenue will grow 10 per cent and the telecommunication services segment that accounts for 42.1 per cent of the Indian ICT market is expected to grow by two per cent in 2014. 

“The IT market in India is the third—largest among emerging economies and the fourth—largest among developing and mature Asia/Pacific countries,” believes Peter Sondergaard, senior vice president at Gartner and global head of research.

Sondergard sees the telecommunications services market that includes fixed and mobile, data and voice services will continue to be the largest IT segment in India with IT spending forecast to reach $30 billion in 2014.  The devices market, which includes mobile phones, PCs, tablets and printers, is expected to total $23.5 billion in 2014, a 6% increase from 2013, he said.

IT services, he believed on the other hand, will record the fastest growth amongst the various segments, and it is projected to grow 13% to reach $11.2 billion in 2014, while software will account for $4.1 billion in revenue.

However, businesses will remain cautious on account of pressures of moderate revenue growth across industries as well as high inflation. As the  Coeus Age report obseves that three fourth of the CIOs interviewed said their top priority is operational in nature, focused on cost control and efficiency drive, besides striving for a healthy cash flow and ensuring an organic business growth. About 51% of the respondents said their IT focus is to bring efficiency and optimization in IT management.