Large Indian firms to increase IT spending in 2013

by CXOtoday Staff    Apr 09, 2013

IT spending 2013

India is one of the fastest-growing IT services markets in the world. So it is not surprising that three-quarters of large Indian enterprises are planning to increase IT spending in 2013, with an average IT budget of $12.2 million. According to a survey by Gartner, about 30 percent of large Indian companies said that control of IT budgets is shifting toward business units, including marketing, the CFO office and lines of business. As budget control shifts occur, when all budgets become IT budgets, service providers must take a multipronged approach and not target only.

The biggest IT spending in India was in the communications industry, followed by banks and securities. As banks embark on their next phase of transformation into more competitive, customer-friendly institutions, key opportunities are likely to come up for service providers in the areas of core banking systems and upgrades/ integration with other peripheral systems. Near-term opportunities in the banking sector will be in the areas of collections, contact center services, business intelligence (BI), mobility and IT outsourcing (ITO).

“Indian companies’ IT priorities in 2013 are the cloud (particularly infrastructure as a service [IaaS]), virtualization, data center consolidation and IT modernization,” said Arup Roy, research director at Gartner. “Approximately 10 percent of spending in 2012 was allocated to external services; and 14 percent of this was on cloud related initiatives.  Similar ratios are expected in 2013. There is a greater inclination towards private cloud contracts, more than in any other market this year.”

In the next five years, we are likely to see more IT spending coming from the CMO’s office, the CFO’s office and other lines of business.
-Arup Roy, Research Director, Gartner

Relatively poor spending in the vertical industries of insurance, government and utilities set India apart from other countries. Nevertheless, these markets are likely to offer strong opportunities for service providers. Some of the largest IT deals are starting to come from central and state government. Specifically, opportunities are emerging in state and central government bodies that relate mainly to efficiency, transparency and e-enabling projects for citizen-facing services, as well as workflow-related projects.

“In most organizations the IT department controls the budget, which is centralized, but some control is shifting. This is more or less in line with other emerging and mature markets“ said  Roy. “The pace of this shift will be quite fast as cloud-based delivery methodologies mature, and organizations gain trust and confidence in them. Indian IT budgets continue to rise, and the categories of spending to widen in the coming year. Indian service providers have an opportunity to capitalize on planned increases in IT spending among Indian enterprises in 2013.