India Domestic IT/ITeS Market To Touch Rs. 1,10,000 Crore In 2008

IDC (India) Limited, predicts that the domestic IT/ITeS market revenue will touch Rs. 1,10,000 crore in 2008 while sustaining the growth of 27% recorded in 2007. This would result in the market growing at 24% in 2008 over 2007.

The year 2008 is set to mark the beginning of Growth Phase 2.0 to be characterised by opportunities arising out of the leveraging of the IT infrastructure built up so far.

This was revealed by IDC India, as part of its annual predictions for the domestic IT market for 2008 that serve as a comprehensive reference guide for the industry.

“By posting a substantial jump in the domestic IT/ITeS market since 2002, the industry is now onto a new growth trajectory. IDC India expects a significant transition in the Indian IT market as part of the Growth Phase 2.0,” said Kapil Dev Singh, Country Manager, IDC India.

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“Growth Phase 2.0 will leverage the IT infrastructure and technical capability built up so far to offer new-age services to the Indian enterprises and consumers,” added Singh.

Key predictions for 2008 include:

The India domestic IT market will transform significantly with the existing IT infrastructure evolving both in technology terms and depth of penetration. Higher demand for sophisticated enterprise and consumer services will drive this trend as the India domestic IT market ‘comes of age’. Not only are key market segments growing at a healthy pace, the evolution of the market is visible in the scale and scope of enterprise IT infrastructure deployment across all verticals as well as emerging verticals, including the government.

The Digital Experience for the Indian consumer to hit the next level. Fixed-line broadband to emerge as a dominant trend in 2008. Indian customers have already started living the digital experience. Convergence is playing an important role in bringing different media together to offer multiple services to customers over the same platform. The Indian telecommunication products market can also be categorised into distinct and rapidly evolving segments. According to IDC fixed-line broadband will emerge as a favoured choice in 2008, though mobile Internet will continue to grow as an alternative Internet access medium.

Fixed Mobile Convergence (FMC) will signal the onset of a new battle in the Indian telecom sector; integrated service providers will gain edge, the stage will also be set for a significant onset of Unified Communications (UC) services. FMC starts making sense to operators when they cross thresholds in both fixed-line and mobile subscriber numbers. This, according to IDC India is now truer for all major integrated telecom service providers in the country, and those who are able to roll out FMC first stand to gain the most.

Even as vendors reach out to new geographies (beyond BRIC) for growth, India would continue to remain the centre of attraction. As the BRIC nations move towards IT maturity, vendors are scouting for new emerging geographies to maintain sustainable growth. IDC India expects India revenues to grow the fastest during 2006-2011 amongst all BRIC nations even if the focus moves beyond the BRIC countries. India, currently contributes to about one fifth of the total BRIC revenues.

Virtualisation will become mainstream in 2008 as it gains wide-scale adoption. Enterprises across segments like IT/ITeS in India have been early adopters of consolidation and virtualization. IDC India estimates the share of virtualised servers to double from the present 22% to 45% by 2008 end. In addition to benefits like ease of management and better resource utilization, enterprises are increasingly becoming aware of additional benefits like design densities, power and cooling. The success stories of virtualisation that have gained momentum are expected to have a positive impact on other segments like Manufacturing, BFSI and Aviation during 2008.

Uptime, availability and performance management of infrastructure and applications to be at the core of innovation. To fuel the underlying shifts in the managed services delivery model.

Web 2.0 market in India to take off in 2008, shakeouts and a possible string of consolidations to follow. With over 75 active Web 2.0 start-ups in 2007 and global heavyweights like Orkut, Wikipedia, YouTube and Frickr enjoying a mindshare of Indian users, the market is poised for a take-off in the second half of 2008. The entry of big players in the market will lead to increased spend on marketing and promotions. This will lead to increased user awareness and participation, something that will
benefit and accelerate the overall Web 2.0 market in India.

Security: Heightened business risk perceptions and security concerns will drive increased investments into a range of enterprise-wide and client-centric devices and applications. Increasing competition and changing business needs are forcing enterprises to continuously evolve new business models. Partnerships and collaborations are the mantra of today’s new business environment.

IT Solutions (hardware + software + services) delivery will witness change in 2008 with pockets of success and growing awareness setting the stage for wider market adoption. Fast-maturing Small and Medium Business (SMB) segment to be a key driver.

Worldwide IT spending growth will decline, with a significant U.S. market downside risk. IDC predicts that in 2008, worldwide IT market growth will be lower, at a moderate 5.5-6% worldwide, down from 2007’s 6.9%. According to IDC’s Global Research Operation (GRO) team, the earliest impact from economic downturns is felt, historically, in the hardware sector, with software impact lagging by one or two quarters and services impact more gradual.