Indian IT firms to strike gold

by CXOtoday Correspondent    Sep 25, 2003

BANGALORE: The strong upswing in the domestic IT market this year is expected to continue with organizations stepping up their spending budgets on hardware, software and services. Like numerous IT vendors, IBM India is gladly riding the profitability wave, witnessing magnified sales in its entire range of offerings.

According to Abraham Thomas, IBM Indiaůs Managing Director and CEO, “Corporate purchases of both IT products and services has increased. Our third quarter results for the current year look promising, with orders coming from a wide range of segments, indicating a strong revival in IT expenditure.ů

The last two years have had a devastating effect on the economy, with IT expenditure budgets experiencing an alarming decline, and vendors struggling to stay afloat in the crippling economic situation.

Thomas added, “Promising orders strongly indicate that IBM is well on its way to being Indiaůs largest IT provider.” He declined to supplement his vision with a time estimate, justifying that the growth would depends on several external factors. “IBM India is growing faster than the IT industry as a whole, and that is an encouraging sign,” he said. IBM like many other MNCs does not reveal country specific revenue and growth numbers.

Its revenue last year is said to be in excess of Rs 1,650 crore, which includes domestic hardware, software sales and also income from IT services and software exports.

According to IT market research firm IDC India, the total Domestic IT spending budget touched Rs 25,931 crore in 2002, a growth of 6% over the previous year. IDC predicts that the domestic sector will grow by 16% this year. In the next four years, domestic IT expenditure is expected to show a CAGR of 21%, with total IT spend touching Rs 55,925 crore in 2006.

Mr Thomas attributed IBMůs recent market growth to its new associates, such as PricewaterhouseCoopers (PwC) consulting and Rational Software, which are helping it sell products and services to new customers. The integration with PwC has also helped in enhancing IBMůs end-to-end offerings he added. With organizations preferring to deal with few vendors, the end-to-end capability is helping IBM, especially in its focus on small and medium segments and emerging markets.

Mr Thomas said that IT infrastructure management is quickly following an outsourcing trend, with India being one of the biggest gainers. IBM has signed several deals in this space, but Thomas declined to name customers due to non-disclosure agreements signed with them. “These long-term projects ensure a steady flow of income, vital during economic slump cycles. IBM India, which has a workforce of over 5,500, declared that its recruitments will not be parallel to its revenue growth.