Expert Speak

IT Spend To Pick Up As Industry Pins Hope On New Govt

Pick Up

-Manish Bahl

India is passing through tough times. Poor economic policy, high inflation, delayed reforms, the rupee’s free fall against major currencies, multibillion-dollar scams, and political gridlock are all negatively affecting the country’s growth. Forrester anticipates that the Indian economy will start picking up in 2014, albeit at a slower rate, thanks to the positive impact of good monsoons on agriculture growth, an uptick in exports due to the weakening of the rupee against the US dollar, and huge infrastructure projects in the public transportation, housing, agriculture, and farming sectors — projects that we expect to take off once the new central government is in place.

As a result, the 2014 forecast has been marginally increased from 7.4% to 8%. Forrester now estimates that India’s IT purchases will grow from Rs 168 billion in 2013 to Rs 181 billion in 2014. However, the sharp depreciation of the Indian rupee against the US dollar means that dollar growth will be flat. In dollar terms, the overall market is expected to grow marginally by 1.1% in 2014 to $29.1 billion.

Customer Will Shape Technology Spending 
Indian CIOs’ top business priority is to address the rising expectations of customers and improve customer satisfaction; 87% of those we surveyed consider it a high or critical priority. Lowering the firm’s overall operating costs is much further down the list of priorities. This highlights the general shift in spending patterns at Indian firms, as improved customer centricity overrides lower operating costs. Business leaders want to leverage technology to better engage digitally enabled constituents, fueling a fundamental shift in the way firms interact with customers.

What it means for Channels?
Although computers, peripherals, and communications equipment will continue to dominate overall technology spending in 2014, software and services — packaged and industry software, IT consulting, systems integration, and IT outsourcing — will gain the most from the sharper focus on customers. Also, firms increasingly require business-driven consulting and delivery arrangements with their service providers to respond to customer needs. Services and software — segments that account for 17% and 21%, respectively, of total business and government purchases of IT goods and services in India — will grow by 13% and 11% in 2014.

BI, real-time analytics, security software, infrastructure software, mobile apps, big data will gain most from increased software spending in 2014. IT consulting and systems integration will benefit from increased software spending. To adopt a customer-obsessed agenda, Indian CIOs need to realize incremental value at key milestones while building toward a broader vision. As a result, they will seek IT services vendors with a more consultative and business-driven engagement and delivery model. Indian CIOs will consider providing new interfaces for hard-to-extend applications not only by enabling existing applications to inter-operate, but also by using new business logic and process rules to orchestrate them.

( The author is Forrester’s Vice President and Country Manager for India and can be reached at mbahl@forrester.com. The views expressed in this article are those of the author and do not represent the views of Channel Times or any of the websites managed or operated by Trivone Digital Services)

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