Fiscal 2003-04 is not likely to be any different from the previous fiscal in
terms of IT spend by verticals.According to Gartner, of the total IT spend of
$12 billion in India during 2002, nearly 33 % was consumed by the communications
sector (includes telecom and broadcasting) followed by manufacturing at 13%.
Other big spenders include the BFSI, services and the government sector. While
there might be some segments like the BPO industry, which may see higher growth
rates due to the nascent stage of the industry, verticals like manufacturing
would continue to dominate in IT spending since the base of the industry is very
large. Some verticals with a very small base like the healthcare and hospitality
industry are also expected to see accelerated growth in spending as they expand
into more sophisticated usage of technology. As a thumb rule, Gartner says that
the vertical IT spend is expected to be equivalent with the international
competitiveness of the industry segment.
Communications industry
IT spending in the this sector will by far outstrip investments by any other
verticals. Kingshuk Hazra, the industry vertical analyst at Gartner explained
that, "this is because communications sector–read the telcos–are the
biggest consumer of networking equipment–which is the single biggest IT
spending category in the country now". Besides the rapid expansion of the
telcos, the broadcasting industry is also in the expansion mode what with the
race for launching new channels going on.
Manufacturing
Here process manufacturing spends much more than discrete manufacturing.
This is contrary to what is happening in the rest of the countries in Asia
Pacific. Hazra explains that, "discrete manufacturing has fewer number of
players in India. We see that the discrete manufacturing players are higher up
the value chain and are investing in high value IT services. They are already
through with basic computerization which the process sector is focusing on
now".
BFSI
The BFSI sector has an estimated spend of $1.2 billion. The financial sector
will see a mix of both IT hardware and services spend. While the MNC companies
are spending on IT services in a big way, national banks still need to be
purchasing a lot of hardware to upgrade existing systems, expand their
computerization initiatives into smaller branches and providing ATM facilities
to customers.
Government
The Government is the fourth biggest vertical in terms of IT spending. Many
e-government initiatives undertaken by the Central Government and some state
governments like in Karnataka and Andhra Pradesh will continue to spur growth in
the IT sector. Besides, the government directive of keeping aside 2 % of each
department’s budget for IT purchase has been instrumental in driving IT
penetration in government offices. The Bhoomi project by the Government of
Karnataka and the Gyandoot project in Madhya Pradesh are indicators of the
spending patterns in e-governance projects. The Census Board of India has
embarked on an ambitious plan to digitize its 22 crore census forms.
Services
Among the services sector, BPO players would be making a lot of purchases as
the sector itself is in the ramp-up stage.
Wipro Spectramind has just started its third center at Chennai with the total
capacity going up to nearly 4,000 seats now. It has two other centers in Delhi
and Mumbai. Besides captive centers like American Express and GE are also
ramping up fast.
Other segments
Other segments witnessing fast growth include the healthcare industry,
insurance sector and the logistics industry. The Indian healthcare industry is
poised to take off as a global destination of cheap but quality medical services
just as the insurance sector would be witnessing a boom with the opening up of
the sector. The logistics sector is experiencing a boom spurred by the Prime
Minister’s vision to connect the country with quality roads.