IT spending to slow down in 2009

The country’s IT spending is expected to slacken this year, growing at an annual 14.1 per cent, down from 18.1 per cent recorded in 2008 due to the ongoing economic slowdown, according to a research report.

Springboard Research in its brief titled ‘India IT Market Predictions 2009’ said, IT spending in verticals like retail and real estate will be hardest hit, while the advent of 3G and a protected financial system will help sustain growth in the telecom and bankingôfinance verticals respectively.

In addition, government initiatives will spur economic growth and increase spending on public security and national defence, coupled with rural sector initiatives should include outlays for new technology in the years to come.

“With the economic crisis expected to further worsen, we will see IT spending affected in India ¿ although not to the same degree as in North America, Europe and other Asia Pacific markets like Japan, Australia and Korea”, said the firm’s Research Research Manager Manish Bahl. “On the other hand, the country had delivered impressive growth and profits to both leading multinational and domestic vendors last year, and for many of these vendors, their Indian revenues grew more than 50 per cent in 2008,” added Bahl.

The study highlights the top 10 trends that will shape the IT market in India this year including the arrival of 3G which would unlock enormous opportunities for the IT vendors.

Also, cost concerns would drive a key focus on IT infrastructure consolidation and economic pressures to drive SMBs towards outsourcing.

Start-ups and smaller firms will become more important accounts for IT vendors while virtualization would gain traction in medium and large sized enterprises and IT outsourcing could be seen as a catalyst to HR retention and cost reductions during the economic squeeze, it said. Online advertising markets will gain momentum with the emergence of niche social networking sites and regional portals and Public Sector to buoy IT spending, the Springboard report pointed out. Further, it said, Indian enterprises will be more focused on their “core” areas to foster specialization and this will increase their dependence on technology to reduce operational expenditure.

Also, the increased use of the internet and IT will continue driving infrastructure requirements that will create new opportunities in the Indian market, it said. “Albeit in a slow pace, SMBs will also play their part to drive the market and this is well supported by the changing attitude of companies to view IT as an investment,” Bahl said.

Besides, the increased use of the internet and IT will continue driving infrastructure requirements that will create new opportunities in the Indian market. Moreover, the current economic slowdown will trigger a new kind of competition in the market as enterprises focus more on ROI calculations, enhanced planning and extended involvement of the IT vendors.

The ongoing crisis will provide a platform for Indian companies to be more productive and gain a level of maturity from both the business and IT perspective. At the end of the crisis, India is expected to emerge as a more sophisticated IT market that plays a bigger role in the overall Asia Pacific IT market.

“While major multinational vendors continue to view India as a critical growth market, we expect other US-based firms to amplify their resource influx into the region and set up special teams to focus only on emerging markets such as India,” Bahl said.