Not So Domestic

The Indian IT market has grown by 24% dur-ing 2003-04. This is historic, as

Indian IT has never grown by over 9-10%. It is therefore important to analyze

this before celebrations begin.

Lets us look at those areas where the growth has been exceptionally high and

has played a role in pushing the domestic growth rate. Large servers (68%),

workstations (44%), notebooks (80%), peripherals (47%), networking (32%),

hardware services including IT outsourcing and facilities management (39%),

domestic BPO (53%), and consulting (69%) were the big growth segments. All these

add up to Rs 13,099 crore, which is about 40% of the total Indian IT market.

This portion of the Indian market grew by 54%.

Everybody knows that the booming BFSI, telecom, and BPO segments created got

the big jump in server sales. And that the picking up of the pharma and

manufacturing segments and the relief in US sanctions got the workstation sales

going up. Dropping prices of notebooks coupled with better connectivity had its

impact on notebook sales. Same is story of rapidly falling peripheral prices. We

have all been reading about the big and small orders that are being bagged for

facilities management. In fact it was the dropping hardware prices that had a

very positive effect on software sales in India.

Ibrahim Ahmad The domestic IT spending happened in MNC and BPO setups, in black-hole governmental projects, and not in schools, homes and small offices

Another interesting observation here is that all the growth has happened in

the corporate sector. If one goes through the vertical-wise IT growth rate for

the year gone by, it is clear that SOHO, which is actually the mass market

consumer, has really not grown much.

While computers have quietly been moving into posh offices and business

enterprises, they have really not moved much on the consumer front—which is

where the feeling of growth eventually comes from.

Government spending on IT is another area, which is worth looking in detail.

It has been going up steadily over the years, and last year it was as high as

18%. We all know that though the last government was really very bullish on IT

and was spending a lot on it. But clearly the human or the 'for the masses'

face was missing from it. That huge government spending on IT should have

ideally got translated into more computers for schools, more IT based services

in government departments and processes. Since this was not happening, the feel

that domestic market is really picking up will not come very easily.

Clearly, the domestic IT spending was happening in MNC offices and BPO

setups, in black-hole type governmental projects, and not in schools, homes and

small offices. The industry believes that this is the IT spending and usage

growth pattern the world over. It starts from the enterprise side and then flows

over to mass market. Socio-economists will therefore argue on this figure of 24%

domestic growth. They believe that this theory is okay, it cannot become the

guiding principle for all cases. Infotech accumulation by a section of society

in a country like India will create more problems rather than solve.

Finally, is it time to celebrate? I think it is. But there is a caveat. The

domestic market is not only about the enterprise users. It is about consumers

too. Unless, there is IT spending growth among the mass-market consumers, the

domestic market growth is only partial.

Domestic market growth should mean more IT in homes and small offices,

schools, government departments and



so on. More than the industry, the government will have a big role to play to
make the entire domestic market grow.

China is a live example, where government is influencing through policies and

incentives. It's clear, however, that the job for India is not even half done.

So party hard, but remember that tomorrow is another day and time to get back to

the drawing board again!

The author is Editor of Dataquest Ibahim

Ahmad