Knights of the Chessboard

A week or so back IDC India conducted its annual briefing session,

Directions, 2005. As usual, it provided a quick look at the state of the market

today and the projections for the future. From the viewpoint of the domestic

industry the most interesting observation was that the domestic market for IT is

the fastest growing in the Asia Pacific region, and will continue to remain so.

IDC predicts that this market will grow at 18% CAGR till 2009. That is lower

than the 24% growth achieved this year-but still a very impressive number. The

base is still small, by international comparisons, and the percentage spend on

IT as a proportion of GDP, still low (a bit over 1%)-but both are growing.

What that means is that the domestic market is not completely swamped by the

much more visible success of the ITS and ITeS export led industry components.

Based on these the PC shipment numbers are expected to swell to 9.8 mn units by

2009. That is encouraging-though one must confess, not exciting. The big

growth in hardware is not PCs but notebooks, digicams, LAN equipment, and other

accessories and peripherals. All these are slated to grow in excess of 25% each

year for the next 5 years. On the software side the greater-than-25% growth

areas are security and business intelligence software. And, on the services side

outsourcing is expected to grow in the same range.

Shyam Malhotra BPO & IT services, government & education, BFSI, communications, media, manufacturing-many verticals and segments are expected to drive growth

So, what is driving growth? The good part is that it is a broad based growth.

Many verticals and segments are expected to make this happen-the key ones

being BPO & IT services (20 % plus), followed by government & education,

BFSI, communications, media and others. Manufacturing comes at the lower end,

but with 13.5% growth projected in this sector. Not surprisingly, the highest

growth rates are in the industries that are technology driven by their nature.

But the emergence of new spenders in the form of government and other sectors is

a very positive sign.

What this is resulting in is a scenario where hardware, software, and

services are all expected to keep growing with CAGRs of 18—19%; with the

mature user industries absorbing software and services in a higher proportion,

and the new spenders soaking in the hardware. In this way the growth momentum is

expected in all segments of the IT industry.

Beneath these numbers there are some fundamental shifts taking place in the

structure of the IT business, which are universal. The first is that the overall

ecosystem is changing to a more complex and converged one. And the term computer

seller, or computer specialist, is giving way to the term-IT seller or

solution provider. That means opportunities in all directions, and the growth

path, therefore, is not a point to point one. Instead, it is one where you are

sitting at the center of a circle and can grow in all directions.

The sales process is also undergoing a structural shift. In the first phase,

channels took over from vendors. Now the channels are merging and in the next

few years we must watch out for a merger of the computer, communication and

entertainment channels.

The backend of many of these changes is expected to be the wireless and

broadband access. The first one will introduce a new level of ease into user

hands and the latter will open the possibilities of many new applications.

Together, these are the enablers of major changes that are on the anvil.

For the suppliers so many new options coming up mean new opportunities. Yet

the problem remains old. How to retain focus while growing in different

directions? They need to be the knights on the chessboard. Be able to move in

different directions from any given position. Be able to withdraw from

positions, and be able to move forward, as required. And jump over other pieces

on the board.

The author is Editor-in-Chief of CyberMedia, the publishers of Dataquest Shyam

Malhotra