Open Forum

New Delhi, 24 December 2014

IT Development

INDIAN FIRMS GAINING SHARE

By Dhurjati Mukherjee

Reports reveal that IT spend is expected to grow at 9.4 per cent to $ 73.3 billion in 2015, up from $67 billion forecast for this calendar year. This would become possible due to higher spending in sectors such as cloud computing, social and big data technologies as also increasing computerization even in small offices in towns and semi urban areas. Meanwhile, Government projects such as ‘Mobile Seva’, ‘Digital India’, and ‘Pradhan Mantri Jan Dhan Yojana’ is expected to trigger the adoption of software solutions and gear up IT in areas such as manufacturing, retail, travel and tourism in the coming two to three years.

According to research agency, Gartner, the share of India in the global arena may also increase, making it the third largest in the Asia-Pacific region by 2016 and the second position by 2018. India now contributes only around 2.2 per cent to the revenue of Infosys while TCS derives 7.6 per cent from this country. However, there are reports that the market in India is quite robust and is expected to grow at over 10 per cent.

As per Gartner, the growth will be fuelled by IT services and software that are seen to grow at 10.5 per cent and 9.6 per cent respectively. While IT services are forecast to record the strongest revenue growth at 15.7 per cent in 2015, devices could jump 12.6 per cent and telecommunication services by 4.2 per cent. In the current year, mobile data services are set to be the fastest growing segment in the country, rising by 18.2 per cent.  

There is general agreement on the fact that Indian IT companies are to continue gaining share. The winners in the next few years would be those companies that continue to ride the wave of application and infrastructure management services to platforms and business process management built on steady bedrock of vertical domain understanding. As such, there is need to develop capabilities in analytics, big data, cloud computing and intricate software solutions. In fact, these companies have low onshore presence in areas like consulting and focus needs to be given in these sectors through induction of modern technology and innovative solutions.  

A study, jointly conducted by the Boston Consulting Group and the Confederation of Indian Industry (CII) a year or so back, found that domestic information technology market is set to grow by 12 per cent to reach Rs 1.75 lakh crores by 2016. Of this, the IT sector is set to grow at 14 per cent and touch Rs 96,000 crores by 2016.  

The report suggested an 8-point agenda to enhance collaboration among stakeholders. As part of the agenda, users must define the role of IT in their organization, enhance their capabilities to use it and work with providers to identify business needs. New technologies such as social media and cloud computing should be increasingly used.  

This report aptly urged IT providers of the country to concentrate on Indian companies through specific strategy orientation and optimizing delivery models at competitive costs. Sectors such as education, healthcare, media and retail are relatively low IT spenders currently but are expected to significantly increase their expenditure on this front in the near future. There is already high quality workforce available in the IT sector and this need is to be gainfully utilized.   

India annually imports $100 billion worth of electronic products and the way demand is growing it could touch $400 billion by 2020. As such, the Government has very aptly come out with a policy of ‘Net Zero’ electronics import by 2020, according to RS Sharma, Secretary, Department of Electronics & IT at the recently-concluded Infocom 2014 at Kolkata. The Government has shown its seriousness in boosting up electronics manufacturing and proposed a Ra 10,000 crores electronics development fund. As the country has a fast growing mass of internet users and possesses highly skilled technocrats, the fund would boost up the sector and help in entrepreneurship development. The Government may not make the investments directly but route through venture capital funds that are focused on electronics hardware and IT.  

As per the National Policy on Electronics (NPE) 2012, the States were been asked to earmark land for setting up clusters for manufacturing electronic clusters and some have already done so. Under the policy, the Government had announced two sets of schemes – Electronic Manufacturing Cluster and Modified Special Incentive Package Scheme (M-SIPS) – to attract investment in the electronics manufacturing sector. It was also agreed that under M-SIPS, the Government would provide Rs 10,000 crores during the 12th Plan period.    

As per Government projections, the turnover for electronics in the country is expected to increase to $400 billion by 2020 from $45 billion in 2009. Production is estimated to reach $ 104 billion by 2020, creating a gap of $296 billion in demand and production. All this would not be difficult to achieve considering the thrust given both by the UPA and also by the present Government on the electronics sector.    

Keeping in view the potential of electronics and IT and the possibilities of employment generation in the coming years, there is need to give special impetus for its growth. More and more engineers are coming out every year – some with high levels of specialization --- and these technocrats have to be gainfully utilized. Though various initiatives are already underway at industry as well as firm levels to ensure that there is less of cannibalization and more of revenue opportunity, the path to achieve would be through strengthening the R & D structure of Indian IT companies to reach out to emerging fields. It is well known that there is no lack of talent in this field to take care of the needs of the international clients and come out with innovative solutions.      

The special focus on IT and electronics as manufacturing has to be increased in a big way and the process of industrialization has to be carried forward. The cry all over the world is ensuring economies of scale and IT has undoubtedly been successful in bringing about changes leading to cutting costs, systematizing operations, improving manufacturing, ensuring promptness and increasing overall productivity. 

In the years ahead, there is need for engineers and technologists in the electronics sector to further concentrate on innovation and give manufacturing the edge that could be the spin-off for the country emerging big and strong. Undeniably, the R&D spending has to be increased and the Government should give special tax concessions to companies who allocate money for this purpose. India has to emerge as the leader in the Asia-Pacific region in the coming years and only innovative research could help in this regard. --- INFA  

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