PSUs spent $8.5 billion on IT last year

by CXOtoday News Desk    Apr 15, 2013

Indian currency

The Public sector units (PSUs) are getting very gung ho about IT. More PSUs had allocated huge budget on IT spending last year.  Zinnov, a market expansion and globalization advisory firm, today released its report on Indian PSU landscape capturing figures on the burgeoning PSU segment in India.  According to the report findings, PSUs account for $383 billion of turnover in FY 12 with a revenue growth of 11 percent since 2009.

The sector employs about 1.4 million workers with 40 percent of PSU companies operating in the manufacturing sector.

The report highlighted that the investment in technology is the key trend that is shaping up the growth of the sector. PSUs are investing in technology to help address the challenges they faced in early years of transition towards establishing a more transparent and accountable organization, reduce the cost of production and enhance productivity and customer reach.  IT spending accounts for two percent of total PSU revenues—higher than most other verticals. 

According to the report findings, energy and BFSI are the major PSU verticals for IT investments.

As regards to challenges that have impacted the growth of the Indian PSU sector, presently the major challenge is the ‘Talent Related Challenges’ resulting in lack of performance incentives in terms of recognition and accelerated growth paths for workforce giving rise to productivity challenges.

In addition to this, other challenges like lack of quantitative benchmarks against domestic private companies or global equivalents is affecting the performance of the sector while broad-based decision making structure (stakeholders with overlapping responsibilities) is resulting into the lack of accountability.

 “India is a hub of 225 PSUs operating across verticals, with 16 of these companies featuring in the global list of top 2000 companies. With their growing size and dominance, PSUs have started looking at IT to address the global competition. Examples like SBI which has done one of the largest Core Banking Solution implementation globally or BPCL which has made early investments in Big data make the segment very lucrative for the technology companies,” said Praveen Bhadada, Director, Market Expansion, Zinnov.

 “IT is viewed to be a major cost reduction enabler in many PSUs by automation of processes and integrated IT set ups. Today PSUs are looking at IT to analyse customer information efficiently and develop targeted and customized offerings for customers,” added Bhadada.

The report concluded that Indian PSUs are expected to witness a turnover of more than $1 trillion by 2020 and a large part of the growth will be attributed to investments in modern forms of IT including cloud, Big data and mobility.