India’s top 50 enterprises to go aggressive on IT spending

by CXOtoday News Desk    Nov 27, 2013

IT spending

The coming months will see India’s top 50 companies investing more in technology, with over 30% of IT spend aimed at transformational projects, especially in the areas of Mobility, Cloud and Big Data. This was stated by advisory firm Zinnov in its latest study titled, ‘Opportunities with Large Enterprises in India’ which highlights IT investment and trends among the largest Indian corporations. The top 50 Indian companies – selected on the basis of total annual income excluding IT companies - demonstrated growth at a CAGR of 12% in INR terms despite economic challenges in FY13, even though revenues declined marginally by 1% in USD terms. Interestingly, 10% of the top 50 are headquartered outside the Tier 1 cities, in emerging locations such as Indore, Jamnagar and Dehradun. Oil & Gas was the only sector that made significant capex investments, while this remained flat or declined for other industries in the top 50 such as metals and mining, BFSI, telecom and power.While the growth story remains positive, profit margins at these firms have been low, affected by regulatory issues that 50% of the firms quoted as a reason for business volatility. In fact, EBITDA margins of the top 50 have demonstrated a steady decline over the past three years, from 16.5% in FY11 to 13.7% in FY13. Further, 60% attributed uncertainties in the global economy, while they also faced margin pressures from overseas investments and domestic expansion projects. Expansion and growth are key themes for the top 50 players. For example, the represented automotive companies are focused on entering new markets, expanding product range and increasing product quality/innovation, while those in metals and mining are aiming at capacity expansion, new market entry and quality refinement. The rural and domestic markets are key focus areas for FMCG and BFSI firms. In a sign of their commitment to new market expansion, many of the top firms have already gained international recognition and are among the world’s leading companies in their respective industries. The released study predicts that India will have over 175 Indian companies in the global list of top 2000 companies by 2020Technology is being seen as a key driver of growth and a strategic business enabler, with focus areas being real-time information processing to drive critical business decisions, consolidation and big data analytics to develop new use cases, increasing efficiencies and creating a unified customer view across operations. The Zinnov study revealed that while ~50% of the CIOs of these firms are focusing on Mobility, private and public Cloud investments in FY2014, Big Data is their top priority for over 60% of the firms, driven by manufacturing and media companies. Commenting on the study, Praveen Bhadada – Director, Market Expansion, Zinnov, says, “Large Indian enterprises – with their aggressive growth plans and perception of technology as a growth driver – represent a key opportunity area. With an addressable IT spend of $15 billion annually, it presents a massive opportunity for global and Indian technology vendors. To win in this market, technology firms must develop a targeted understanding of each enterprise’s growth strategy and the role of IT in supporting this trajectory. Vendors must engage with CIOs strategically, building joint business cases for advanced technology adoption and demonstrating the ability to take joint risks by exploring revenue share models.”