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Gartner Says Promising Times Ahead For Service Providers As India's Average IT Enterprise Budget Surpasses $12 Million

Three-quarters of large Indian enterprises are planning to increase IT spending in 2013, with an average IT budget of $12.2 million, according to a survey by Gartner, Inc. India is one of the fastest-growing IT services markets in the world. Indian service providers have an opportunity to capitalize on planned increases in IT spending among Indian enterprises in 2013.

Between June and September of 2012, Gartner surveyed 1,523 large enterprises (those with more than 1,000 employees) to determine their IT spending plans. Within the survey, 153 respondents were in India.

“Indian companies' IT priorities in 2013 are the cloud (particularly infrastructure as a service [IaaS]), virtualization, data center consolidation and IT modernization,” said Arup Roy, research director at Gartner. “Approximately 10 percent of spending in 2012 was allocated to external services; and 14 percent of this was on cloud related initiatives.  Similar ratios are expected in 2013. There is a greater inclination towards private cloud contracts, more than in any other market this year.”

About 30 percent of large Indian companies said that control of IT budgets is shifting toward business units, including marketing, the CFO office and lines of business. As budget control shifts occur, when all budgets become IT budgets, service providers must take a multipronged approach and not target only CIOs.”

In line with the trend observed in other countries, the biggest IT spending in India was in the communications industry, followed by banks and securities. As banks embark on their next phase of transformation into more competitive, customer-friendly institutions, key opportunities are likely to come up in the areas of core banking systems and upgrades/ integration with other peripheral systems. Near-term opportunities in the banking sector will be in the areas of collections, contact center services, business intelligence (BI), mobility and IT outsourcing (ITO).

Relatively poor spending in the vertical industries of insurance, government and utilities set India apart from other countries. Nevertheless, these markets are likely to offer strong opportunities for service providers. Some of the largest IT deals are starting to come from central and state government. Specifically, opportunities are emerging in state and central government bodies that relate mainly to efficiency, transparency and e-enabling projects for citizen-facing services, as well as workflow-related projects.

“In most organizations the IT department controls the budget, which is centralized, but some control is shifting. This is more or less in line with other emerging and mature markets“ said Mr. Roy. “The pace of this shift will be quite fast as cloud-based delivery methodologies mature, and organizations gain trust and confidence in them. In the next five years, we are likely to see more IT spending coming from the CMO's office, the CFO's office and other lines of business.

“Compared with many markets, India offers a welcome opportunity for service providers looking for new business. Indian IT budgets continue to rise, and the categories of spending to widen in the coming year.”

More detailed analysis is available in the report " Emerging Market Analysis: Promising Times Ahead for Service Providers as India's IT Budget Soars." The report is available on Gartner's website at http://www.gartner.com/resId=2381715  

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