Indian IT Market To Reach $110 Billion In 2012

IT end user spending in India is expected to grow at a compound annual growth rate (CAGR) of 14.8 percent from 2007 through 2012 to generate $110 billion in 2012, according to Gartner. In 2008, IT end user spending is on pace to reach $64.7 billion, a 17.2 percent increase from 2007.

This prediction, supplemented by a robust gross domestic product (GDP) averaging 8.08 percent growth from 2007 through 2012, means the Indian market continues to represent a significant growth opportunity for IT vendors.

India is poised for double-digit growth across many vertical markets, with financial services and communications organisations spending the most on IT, closely followed by services, manufacturing and government.

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“Indian businesses continue to invest in IT in order to drive operational excellence and innovation,” said Naveen Mishra, senior research analyst at Gartner. “Small and midsize businesses (SMBs) will drive the growth of various IT-related industries, with the critical involvement of value added resellers, distributors and retailers. Additionally, the Indian government’s pro-business policies and their own increasing use of IT will continue to build confidence among local companies seeking to invest in and use IT.”

Key Predictions

- By 2012, Gartner predicts that the Indian market will ship nearly 24 million PCs, of which more than 50 percent will be mobile PCs. By 2012, the Indian market will ship more mobile than desk-based PCs. While desk-based PCs are expected to represent 46.1 percent of the total market, the rest will be mobile PCs. However, Gartner expects that the rapid growth of mobile PCs will outstrip the share of desk-based PCs in the home segment. By 2010, mobile PCs will contribute 51.8 percent of total shipments and will rise to 61.4 percent by 2012. PC penetration is increasing in India’s smaller cities, and these cities will continue to drive growth, especially for desktops. Small business and consumer segments will lead this march in smaller cities. The demand for nearly 35 percent of all PCs sold today are from the top 20 to 100 cities.

- The Indian server revenue market is poised for 6.3 percent CAGR from 2007 through 2012. This growth will be primarily fuelled by the growth in the x86 and the Itanium platform. Unit shipment growth will experience a 10.2 percent CAGR for the same period. Non-x86 based platforms will continue to dominate the high-end and midrange server segments, especially in large enterprises such as the banking, telecommunications and government sectors. Feature-rich processors in x86 servers will account for the majority of server spending, followed by RISC/Itanium-based servers.

- The total software market in India will reach $3.4 billion by 2012. India is one of the fastest-growing software markets, and it is expected to register the third highest CAGR of 16.3 percent for the forecast period of 2007 through 2012. Software spending and plans for critical IT initiatives to attain business agility will remain unaltered. Demand from vertical markets, which see IT as a core business enabler such as banking, finance and insurance will drive the software market in India. Increases in mergers, acquisitions and alliances in the local market by Indian enterprises will increase spending on software segments for applications and process integration.

- India’s domestic IT services market is the fastest-growing market in Asia/Pacific with a CAGR of 20.2 percent from 2007 through 2012, reaching $11.8 billion in 2012. The Indian IT services market is fragmented, and competition will intensify with new players entering into the market, forcing providers to find their market niche and differentiation to win deals. Top technology priorities include security, business intelligence and enterprise application projects.

- By 2012, the telecommunications services market in India is expected to reach $52 billion growing at a CAGR of 26.8 percent from 2007 through 2012. India will remain a wireless and voice-dominated market until at least 2011, and wireline technology will take a back seat. Broadband penetration will reach above 7 percent by 2012, and Broadband Wireless Access based solutions will be the growth drivers.