IT investment growth to dip in FY09

New Delhi, May 25: The growth in information technology investment in the country is expected to dip across all sectors in 2008-09 except in pharmaceuticals and biotech, according to a survey.

Bucking the trend, pharma and biotech sectors, however, are expected to invest about a one-fifth more than their IT investments in 2007-08, said the survey by market research company, IDC India. It said growth in investments in the utilities sector is expected to slow down from 30 per cent in 2007-08 to 10 per cent in the current year. The survey, conducted among 211 large IT user companies in India, revealed that they spent 27 per cent more on IT in 2007-08 as compared to 2006-07.

However, IT spend by these companies is likely to decline this year as the survey expects it to grow by 22 per cent as against 27 per cent last year.

It said IT investments in the retail sector grew the highest at 43 per cent last year with a retail player's average spend at Rs 7.4 crore.

The sector, however, went for off-the-shelf packaged software rather than customised software, the survey said.

Traditional large IT spenders like banking, financial services and telecom remained on top in terms of absolute spend in 2007-08 with the average spend per company in telecom and BFSI sector touching Rs 191.6 crore and Rs 87.5 crore respectively.

The highest IT spend as a percentage of overall revenues was reported by the BFSI sector that invested 1.5 per cent compared to the overall industry average IT spend of 0.63 per cent, the agency said.

The utilities sector led in terms of IT spend per employee, with a budget of Rs 83,000 per employee, much above the overall industry average of Rs 36,000 per employee.

Hardware, that accounted for 43 per cent of the IT budget of these companies in 2007-08, will marginally decline to 41.6 per cent in the current year. However, share of package software in the overall IT budget will hover around the same level of 26 per cent.

Retail, still a nascent industry in India, is going for standard software in a big way and spent 38 per cent of its IT budget on package software. It will continue to lead the growth in 2008-09 as well, with a projection of 36 per cent. BFSI will record second highest growth at 27 per cent, the survey added.

UNI