E-governance projects to push IT spending in India

by CXOtoday News Desk    Oct 21, 2013

World IT spend increase

Even as many government organizations around the world are actively reducing their IT spends, some of them will continue to make strategic investments to streamline their operations. “These organizations are recognizing that new technology investments may help reduce the negative effects of austerity, improve operations and reduce future expenditures,” says a Gartner report on IT spending.

The report states that government IT spending in India will reach $6.4 billion in 2013, a 7 percent increase over 2012. This forecast includes spending by government (government is composed of state and regional government and central government agencies.) on internal IT (including personnel), hardware, software, external IT services and telecommunications. 

Internal services will achieve the highest growth rate amongst the spending categories – forecast to be 12.8 percent in 2013, says Gartner. Internal services refer to salaries and benefits paid to the information services staff of an organization. The information services staff includes all company employees that plan, develop, implement and maintain information systems. Software will achieve a growth rate of 10.5 percent in 2013 to reach $709 million USD in 2013, up from $642 million in 2012, led by growth in vertical specific software (software applications that are unique to a vertical industry. These are stand-alone applications that are not modules or extensions of horizontal applications).

“IT services, which includes consulting, implementation, IT outsourcing and business process outsourcing, will be the largest overall spending category throughout 2017 within the government sector, “ informs Anurag Gupta, Research Director, Gartner. “IT services spending is expected to grow 7.7 percent in 2013 to reach $1.4 billion in 2013, up from $1.3 billion in 2012 – with the business process outsourcing segment growing by 15.3 percent.”

After years of exporting IT outsourcing (ITO) and business process outsourcing (BPO) expertise across multiple verticals globally; many large ICT companies in India are now increasingly looking inwards and targeting the Indian government ICT market. The ICT industry will benefit from various eGovernment projects, which are part of the National eGovernance Plan, with investments in 31 Mission Mode Projects like Unique Identification Authority (UIDAI), which is delivering ‘Aadhaar’ numbers (a target of covering over 600 Million citizens by 2014). UIDAI aims to work with various partners in setting up infrastructure for authenticating and confirming digital identities for several purposes such as for Aadhar enabled payment systems.

“The Indian government is also developing a cloud policy, namely the GI cloud (or Meghraj) which will see more clarity in the near future. Wide proliferation of affordable broadband connectivity (and mobile phones alongside) is expected to provide further opportunities in eGovernance and mobility solutions. Alongside central government projects such as excise, income tax, and post office; other state governments will also undertake initiatives in municipalities, land records and other joint initiatives like digital court rooms and common service centres,” said Mr. Gupta.

Among the other industry verticals across the world, retail, healthcare and transportation will be the fastest growing segments in 2013, while healthcare providers, banking and securities, and transportation will be in the 2012 through 2017 span. Global enterprise IT spending across all industry market segments will grow by 0.6% in 2013 to $2.69 trillion.