Indian IT spending to reach $71.3 bn in 2014: Gartner

Information technology spending in India will touch $71.3 billion in 2014, up nearly 6 per cent from the $67.4 billion forecast for the current year, global technology research firm Gartner said on Tuesday, adding to the cheer of the $108-billion Indian IT industry which is already celebrating a second quarter of good results.

Of this total spending, IT services will record the strongest revenue growth at 12.1 per cent, followed by software revenue at 10 per cent and the telecom services segment (which accounts for 42.1 per cent of the Indian information and communication technologies market) at 2 per cent in 2014, it said.

The IT market in India is the third-largest among emerging economies and the fourth-largest among developing and mature Asia-Pacific countries.

''The long-term growth projections of the Indian market continue to be positive. India is still a vastly underpenetrated market and growth within smaller towns and cities will continue to provide growth for IT vendors across categories, with the consumer market and the small business segment driving this. Rising disposable income and greater consumer awareness are other factors driving the growth of the Indian IT market,'' Partha Iyengar, country manager for Gartner, said at the Gartner IT Symposium in Pune.

''The digital world is here and this results in every budget being an IT budget; every company being a technology company; every business is becoming a digital leader; and every person is becoming a technology company,'' said Peter Sondergaard, senior vice president at Gartner and global head of Research.

He further said, ''This is resulting in the beginning of an era: the Digital Industrial Economy. The Digital Industrial Economy will be built on the foundations of the Nexus of Forces (which includes a confluence and integration of cloud, social collaboration, mobile and information) and the Internet of Everything by combining the physical world and the virtual.''

Globally, the IT industry is set to grow at a modest 3.2 per cent in 2014, and by 2020, the IT spend from various industries, like banking, financial services and insurance (BFSI), manufacturing, healthcare, agriculture, real estate, transportation and more, is expected to total $1.9 trillion.

''As recently as five years ago, the leaders in areas such as cloud and mobile were not on many CIOs' radar. What many traditional IT vendors sold you in the past is often not what you need for the digital future. Their channel strategy, sales force, partner ecosystem is challenged by different competitors, new buying centres, and changed customer business model,'' Iyengar said.

This means that leading IT vendors like SAP, Oracle, IBM, and Microsoft are also now struggling with increasing competition from Amazon, Google, Apple, as well as a host of smaller service providers who score higher on mobility than the top IT players, who still have traditional architecture, which needs to scale up from just pure IT services offerings to an integrated IT services approach which includes advanced business and sales and marketing capabilities.

 ''This scenario applies for Indian IT players as well, who in the next 4-5 years need to rapidly upgrade to grab a share of the huge emerging IT spend opportunity in 2020 and present themselves as partners, instead of mere IT services suppliers,'' added Iyengar.

Interestingly, Gartner expects the troubled telecom segment to soon turn a corner and exceed IT services spending as well. ''In 2013, telecom is the biggest spending segment followed by devices.

"The annual spending of devices will be four times that of government spending, and 80 per cent of that will be contributed by mobiles and tablets by 2017.

"In fact, by 2017, 50 per cent of all new purchases will be tablets, and the global telecom revenues should grow by $309 billion per year by 2020. This is because mobile will become the destination platform for all applications, driven by digitisation,'' said Sondergaard.