IDC Lays Bare Growth Phase 2.0
The new ‘market order’, termed as Growth Phase 2.0 — and expected to evolve 2009 onwards. This phase will be different from Growth Phase 1.0 (2003-08), which saw the domestic market witness an unprecedented growth — tripling from Rs 34,000 crore in 2003 to Rs 1,01,031 crore in 2008, a CAGR of over 24 percent.
Growth Phase 2.0
Growth Phase 2.0, will be built on the back of new and innovative services sought by consumers and enterprises alike. The domestic IT/ITeS market growth rate is expected to come down from an average of 24.3 percent (Growth Phase 1.0) to 16.4 percent in the coming five years till 2013. The relatively slower growth will see enhanced competition leading to a changing strategy and continuous market re-alignment on the part of ICT market participants.
According to IDC, 2009 will witness an evolution in the way business has been done till now. This change will be dominated by issues like productivity, cost saveings and customer retention — eventually paving the way for innovative services.
2009 Domestic IT/ITeS Market Growth Predictions:
The major product categories expected to grow at a rate higher than the industry average include:
Collaborative applications (23 percent), storage software (19 percent) and system and network management software (19 percent)
Within the area of IT services, segments reporting higher than average growth include:
Desktop management (22 percent), information systems outsourcing (32 percent), network management (23 percent) and application management (20 percent)
Among IT solution categories the faster growing ones would be:
Virtualisation (28 percent), unified communications (25 percent) and business continuity services (20 percent)
All these categories point towards the need for better management of IT infrastructure for their most optimal deployment and use in achieving enterprise business goals, said IDC.
India Domestic IT/ITeS Market Top 10 Predictions For 2009
1. Slowdown will accelerate IT/ITeS market transformation: A relatively lower growth rate regime will lead to a need to innovate and leverage existing infrastructure while aligning to market opportunities.
2. India to be the fastest growing market in APAC: The top five growth markets in the APAC region are India, China, Vietnam, Thailand and Philippines. India will continue to lead the pack with 11.4 percent growth in domestic IT spending projected for 2009.
3. IT optimisation technologies adoption and usage will grow: IDC said the emerging IT optimization technologies will move from ‘tipping point’ to ‘mainstream’ in 2009. On account of the slowdown, technologies that deliver significant cost savings such as virtualisation, unified communications, open source, etc. will be assessed and adopted.
4. Telecom sector IT spending growth will be fastest: As the economic meltdown forces enterprises to slash their IT budgets across industry verticals, the telecommunications sector would continue to grow at higher than average growth rate and will be the least impacted by the slowdown.
5. Outsourcing services market will move towards consolidation: IDC believes that the economic slowdown will further increase and accelerate the adoption of outsourcing services by Indian enterprises.
Low-end services like support services and high-end services like business transformation services will undergo consolidation.
6. Experimentation with ‘Cloud Computing’ model will increase but will not become mainstream
IDC India predicts that in 2009, IT ‘Cloud Computing’ service offerings — including the software as a service (SaaS), hosted delivery model — will get tested and adopted on a larger scale. The cloud model’s advantages of lower capital outlay and operating costs, coupled with the reassurance of more major players coming on board and building capabilities (including enabling and educating the channel), will encourage more customers at the margin to invest in cloud offerings. Enterprises, which have been shying away on account of issues of security, connectivity etc., will be forced to re-evaluate the model.
7. New channel forms will evolve: The channel space had undergone a shift during Growth Phase 1.0 (2003-08) with linear distribution models giving way to multiple types of channels. These multiple channels (like system integrators and ISVs) added more value to the technology adopted by the end user. Newer forms of channels would emerge during Growth Phase 2.0, with the market transforming yet again — the key differentiator for the new channel forms will be ’services’ rather than ‘products’.
8. Integration of content, convergence and connectivity: ‘Consumer 2.0′ is not about connectivity, content and convergence in isolation, but their behaviour in an integrated fashion. Consumer spending on IT will be moderate and the emergence of consumer 2.0 will also be affected by further delays in the 3G rollout and dismal performance on the broadband adoption front.
9. Enterprises to look at integrated security approach: As enterprises look at optimisation technologies like virtualisation, cloud computing, hosted delivery model, a key challenge will be information security.
The heightened security risk perception in view of the threat of terrorist attacks will force enterprises to look at business continuity services seriously. The outcome will produce a more evolved security solutions space which will see a growth of 20 percent in 2009.
10. Global IT growth will be halved: Global growth will be cut in half and take three years to come back. IDC predicts that global IT spending will decrease to 2.6 percent in 2009 - half of 2008 (5 percent) and far below 2007 (7 percent).
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