Mumbai, Feb 6: The Indian Information and Communications Technology (ICT) market is estimated to grow at a compound annual growth rate (CAGR) of 20.3 per cent to reach 24.3 billion dollars by 2011 from the 2006 level of 9.63 billion dollars, research firm Gartner said today.
The sector's growth, which was estimated to be nearly two per cent of the country's Gross Domestic Product, will be driven by investments on building and consolidating the basic IT infrastructure, in addition to small and midsize businesses (SMBs), increasingly leveraging technology to drive business growth and efficiency.
Gartner said hardware spend share was estimated to be at 50.9 per cent in 2011 from 54.9 per cent in 2006 from the total kitty of 24.3 billion dollars with the CAGR estimated at 18.5 per cent.
The software expenditure requirement will be five per cent of the targetted amount in 2011 down from 5.9 per cent, with the CAGR being 17.8 per cent. The services segment however will see a tremendous growth in the share touching 44.1 per cent from 39.3 per cent, registering a 23.2 per cent CAGR.
Based on the findings of the Gartner EXP Worldwide Survey of CIOs, Indian firms reported stronger than average IT budget increases of around 13 per cent as against the global average of 3.3 per cent for 2008. This increased spending by Indian CIOs is directed primarily towards building new business capabilities, with 30 per cent of IT spend allocated for business growth and 19 per cent towards business transformation.
Gartner research global head Peter Sondergaard, participating in a conference call, however warned of a possible lowering of the IT spend in view of economic uncertainties in North America, Japan and some European countries. However, according to him this situation will not arise in india.
Mr Sondergaard said the Indian IT landscape was evolving rapidly, driven by forces from a number of different directions, including continued growth in the offshore IT services sector, but increasingly augmented by strong domestic ICT growth. Almost all industries in India were seeing strong growth which, in an increasingly resource-constrained environment, they were trying to manage by rapidly improving their IT infrastructure.
He said as Indian companies continue to increasingly take on global competition overseas as well as at home, Indian CIOs would need to re-examine their business models and processes to transform their IT organisations.
The India CIO Summit 2008 of Gartner to be held here on February 18 and 19 would concentrate on the significant challenges facing Indian CIOs and their teams as they strive to leverage IT to maximise their organisation's competitiveness.
Mr Sondergaard said Enterprise expectations of IT have been building over the past three years. The increase in IT spending is driven by business priorities that need CIOs to drive distinctive, customer-focused solutions. CIOs need to become more tolerant of risk and innovation, and flexible to meet changing market and customer demands.
According to Gartner, Indian firms were spending their budgets more on hardware and software than people. This is significant as Indian firms continue to build out their infrastructure. Indian enterprises will be investing heavily in bringing the base infrastructure, long underinvested, up to global standards to meet the growing needs of the business. These allocations will change over time as the infrastructure matures.
The HR component of the IT budget will grow as the emphasis shifts from implementing standard (generic) solutions to creating unique products and services. Currently, CIOs in India were focused more on generic IT than distinctive solutions required to drive growth.
Gartner head of research (India) Partha Iyengar said, ''As the Indian economy continues to experience steady growth, most sectors have to deal with rising consumer expectations and competition -both at domestic and global levels.'' He said the country's structural cost advantage was eroding, given the upward pressure on local wages and the weakening of the dollar.
Hence it was a business imperative for Indian companies to meet the demands of domestic competition and to offer value propositions that were attractive to offshore customers. In this context, Indian companies have to create distinctive solutions using IT to transform their business and garner a competitive edge.