Indian IT will not suffer due to US recession: Gartner

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Mumbai, Feb 18: The Indian Information Technology enabled services industry will not suffer due to the current slowdown in US and few other western countries and the annual wage hike of 12 to 15 per cent might continue over the next two years, according to research firm Gartner.

Speaking to newsmen on the sidelines of the Gartner India CIO Summit on the ICT market study here, Gartner Vice President and Regional Research Director Partha Iyengar said companies in the developed world have been advised to formulate shadow budget on the IT spending which was estimated to grow around 3.3 per cent for year 2008. In the event of any downward revision due to the 'tightening of the belt' situation, there might be some impact on ITES companies as there might be some delays in execution of projects.

He said it was a misnomer to call India an IT super power as the country's share was less than one per cent of the global IT spend and even within the offshored business the share was not significant.

Replying to a question regarding employee cuts, as had been carried out by the TCS and IBM, he said that huge companies might have taken measures to enhance the performance levels of its employees in view of the global situation and the future trends.

The need was there to enhance productivity per employee.

Earlier in his keynote address to the summit on transformation of It:Impact on business, organisation and people, Gartner global head for research Peter Sondergaard said, ''The Indian IT landscape is 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 are seeing strong growth which, in an increasingly resource-constrained environment are trying to manage by rapidly improving their IT infrastructure.

'' According to Gartner, India's ICT market was estimated to grow at a five-year compound annual growth rate (CAGR) of 20.3 per cent to reach USD 24.3 billion, or nearly two per cent of the country's gross domestic product (GDP), by 2011. This growth would be driven by Indian chief information officers (CIOs) who are continuing to build and consolidate the basic IT infrastructure, in addition to small and midsized businesses (SMBs) increasingly leveraging technology to drive business growth and efficiency.

He said, according to a recent world wide ICT spend survey Indian firms report stronger than average IT budget increases of around 13 per cent versus the world 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.

According to Gartner, Indian firms are spending their budgets more on hardware and software than people. This was 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 are focused more on generic IT than distinctive solutions required to drive growth.


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