IT spending for Indian banking & securities firms to grow 13% in 2013: Gartner

Indian banking and securities companies will spend around Rs 41,700 crore on IT products and services in 2013, an increase of more than 13% over 2012 revenue of Rs 36,900 crore, according to Gartner.

This forecast includes spending by financial institutions on internal IT services (including personnel), IT services, software, data center technologies, devices and telecom services.

IT services will be the largest segment in overall spending category at Rs 13,100 crore in 2013, due to a strong focus on the financial services sector by IT services providers, it is growing stronger than other segments at nearly 18% compared to 2012, said the report.

"Focus on expansion and increasing market share remains a top priority for banks in India. As in other emerging markets, the front office gets preference over the back office in major investments," said Vittorio D’Orazio, research director at Gartner.

Software is the second fastest growth segment, and spending is expected to increase 17.1%, followed by internal services (that includes IT personnel) at 15.7%. In the software segment, desktop software and enterprise resource planning (ERP)/supply chain management (SCM)/customer relationship management (CRM) will exceed the 20% growth landmark with 22.1% and 21.7%, respectively.

"Although we have seen a number of requests from Indian banks regarding the modernization and legacy replacement of core banking systems, the major issue for many of those banks is still the gap between front-office and back-office services. This explains the growth rate for 2013 in the vertical specific software segment at 17.3%. We also see increasing adoption of packages, especially for ‘lite’ core banking systems to address modernization and replacement," said D'Orazio.