India domestic IT services, ITeS and IT Products Market in 2012

  • To touch Rs 1,71,697 crore
  • Together with Telecom services, Mobile phone markets to be Rs. 4,60,528 Crore

Bangalore India’s premier research and advisory firm CyberMedia Research (CMR) has projected that the overall India domestic IT services and Products markets will touch Rs 1,71,697 crore in 2012. Growing at a CAGR of 17.3% over 2010-2014, the aggregate market size of the domestic IT services and IT products sector will touch Rs 2,33,930 Crore by 2014.

Table 1. India Domestic IT Services, ITeS and IT Product Markets:
Size and Growth Forecast, 2010-2014 (figures in Rs Crore, USD Billion)

Source: CyberMedia Research (CMR), 2011

Notes:
1) Hardware includes PCs, Servers, Printers & MFDs, Storage, Networking Equipment, Consumables and Accessories.
2) Networking Equipment includes Switches, Routers, IPT and WLAN equipment, SCS, RAS, Modems, VSAT, Softswitches and Media Gateways.

The continuing importance of the domestic IT sector is visible with the combined IT Services (including IT-enabled Services) and IT Products (Software and Hardware) markets expected to touch Rs 2,33,930 Crore or USD 51 Billion in 2014.

According to Anirban Banerjee, Associate Vice President, CyberMedia Research,
“A large chunk of IT hardware and software products, will witness good traction on account of the healthy growth in IT services, as enterprises try to gain the best leverage out of their IT deployment.”

The combined Telecom Services and Products markets will touch Rs 2,88,832 Crore in 2012. This sector will grow at a CAGR of 15.8% over five year period 2010-2014 leading up to a total domestic Telecoms market opportunity of Rs 3,77,685 Crore by 2014.

The growth in the India domestic mobile device market will be fuelled by a more than 150% increment in the value of featurephones and smartphones shipped, from Rs 50,714 Crore in 2010 to Rs 1,28,729 Crore in 2014.

The India Telecom Services sector may see policy changes that could result in market consolidation over the next few quarters.

“The Telecoms growth story will be a function of the enhanced demand for high speed broadband and data services from both enterprises and consumers, as 3G and BWA / WiMax services are rolled out by various operators to cover an increasing number of cities and towns”, Anirban added.

Table 2. India Telecom Services and Mobile Phone Markets:
Size and Growth Forecast, 2010-2014 (figures in Rs Crore, USD Billion)


Source: CyberMedia Research (CMR), 2011

Notes:
1) Mobile Telecommunication Services include voice telephony services, data services and VAS.
2) Fixed-line Telecommunication Services include PSTN, leased line, IP-VPN, WLL, xDSL and other services.
3) Mobile Phones include featurephones and smartphones.
4) Spends on Telecoms Network Infrastructure and Tablets not included.
5) USD = INR 46

The key highlights of CMR’s 2-part India MarketView 2011 for the IT Services, ITeS and IT Products markets are listed below:

1) India growth story to continue: Domestic IT Services and IT-enabled Services markets to grow at a CAGR of 21.1% to touch Rs 98,188 Crore by 2014.

Of the Rs 98,188 Crore domestic IT Services and ITeS market in 2014, IT Services alone will grow at 16.7% CAGR over 2010-2014, while domestic ITeS spending will grow at a CAGR of 30.2% over the same period.

Managed Services will emerge as a strong growth driver with demand for increasingly sophisticated services engagements from the India enterprise segment.

2) Growth of the Cloud Computing paradigm: The India Public Cloud Computing market is expected to grow at a 53% CAGR over the five-year period 2010-2014 to touch Rs. 2,434 Crore by 2014. Penetration of Cloud Services in the India enterprise segment, which was at 4% in 2010 would increase to 6.8% by 2012. This is a significant development, as it signals that the India software user is moving from the ‘license and use’ model to the ‘pay per use’ paradigm. The India SaaS market is expected to touch Rs. 465 Crore in 2011.

3) IT Product segments like Software (20.1%), PCs (12.9%), Servers (13.3%) and Networking Equipment (15.5%) will all record ‘above average’ CAGR for the 2010-2014, driven by new deployments plus productivity enhancement initiatives in the business enterprise segment, and continued strong consumer demand for clients, particularly for notebook PCs.

Performance of traditional sectors like manufacturing and logistics in 2010 would partially help to swell the market for Customer Relationship Management (CRM) and product Supply Chain Management (SCM) solutions in 2011 and beyond. CyberMedia Research expects the India product supply chain applications market to witness a growth rate of 16.5% in 2011, which is significantly higher than the CAGR of 2.2% for the period 2007-10. The need to digitize documents and effectively manage the huge volumes of data that is generated through paper forms, particularly by the BFSI, Government, Healthcare and Telecoms verticals as well as in digital media will pave the way for growth of the enterprise content management (ECM) applications market in 2011 and 2012. The India content applications market is slated for an 18.5% growth in 2012 over 2011.

4) Enterprise-wide solutions spending will take off in 2011; as will the trend of ‘cloud enablement’ of applications in 2012.

Enterprise Resource Planning (ERP) Solutions: The ERP solutions market was negatively impacted due to the global recessionary trends in 2009. There were signs of recuperation in 2010, in which the ERP market grew by 20.3% over 2009. This trend is expected to continue in 2011, as the ERP market is slated to register a growth of 17.9% over 2010.

5) Enterprise IT infrastructure spending will be strategically driven towards ‘resource optimization’ and ‘business productivity boosting’ technologies such as storage solutions, data center consolidation and virtualization, and unified communications plus collaborative applications. ‘Green IT’ spending will be driven by business priorities in 2012.

High growth areas in enterprise IT infrastructure spending in 2011 and beyond will include:

a) Storage resource management / optimization, data de-duplication and automated tiering solutions
b) Data Center consolidation, virtualization and ‘Green IT’ initiatives will focus on reducing overall cost of business operations and maximizing availability and utilization of resources
c) Unified Communications (UC), collaborative applications plus other ‘cost saving’ solutions

6) High-growth, IT-enabled ‘intelligent’ industry verticals and government sector set to evolve. Notable verticals that would emerge as large or high growth IT spenders in the 2011 and 2012 are:

a) Healthcare & Lifesciences
b) Media & Entertainment
c) Retail
d) Government & Education sector
e) Smart Infrastructure
f) Energy & Power Utilities

Verticals like BFSI, Manufacturing and Telecommunications have been traditionally strong in leveraging technology for business objectives. In 2012 emerging verticals like Healthcare & Lifesciences (over 19% growth over 2011), Media & Entertainment (over 16% growth), along with BFSI (nearly 15% growth), Manufacturing (over 15% growth) and Telecommunications (over 16% growth), will all witness healthy IT spending growth on the back of a sustained economic revival in the India economy. These rates of growth in IT spending are likely to be sustained, in spite of some moderation in GDP witnessed in FY 2010-11 due to tightening of monetary policy by the government to control inflationary pressures. Retail sector IT spending is expected to grow at more than 19% in 2012 (over 2011), while IT spending growth for the Government & Education sector is expected to touch nearly 16% year-on-year (2012 over 2011).

Other emerging verticals, which are expected to be future drivers of growth for the India domestic IT-ITeS sector are Smart Infrastructure (Intelligent Transportation), and Energy & Power Utilities sectors. All of these sectors are witnessing deployment of innovative IT-ITeS and Telecoms applications.

According to Vivek Mishra, Lead Analyst, Smart Infrastructure and Energy Practice, CMR, “IT applications such as Automatic Fare Collection (AFC) Systems for Rail, Road and Multimodal Transport (like Metro Rail, Monorail, and Bus Rapid Transit (BRT)); Intelligent Transport System (including Urban Traffic Management System, Highway Traffic Management System, Public Transportation System, Traveler Information System, Toll Collection System) for toll plazas, national highways and city transport infrastructure; Airport Information Management Systems (AIMS) for new airport terminals as well as greenfield airports are being extensively deployed. Around Rs 206 Crore was spent during 2010 to deploy these ‘intelligent’ IT applications and nearly Rs 4,000 Crore is the expected value of IT spending on these deployments in the 4 years from 2011 to 2014.”

The Restructured Accelerated Power Development and Reforms Programme or R-APDRP Scheme of the Ministry of Power, Government of India plans to use IT-ITeS for making power transmission and distribution infrastructure in India ‘intelligent’. IT applications like Energy Accounting & Auditing, Supervisory Control and Data Acquisition (SCADA) systems, MIS, Integrated Meter Reading (Billing & Collection), Automatic Data Logging System, GIS mapping, Automatic Meter Reading and Prepaid electricity are being enabled across most of the distribution companies (Power Utilities or Discoms) across India. Pilots of Smart Grid deployment have also been initiated by a few discoms.

To sum up, the combined India IT Services, ITeS and IT Products, and Telecom Services and Mobile Phones markets will grow at a CAGR of 16.4 percent between 2010 to 2014 to aggregate revenues of Rs 6,11,615 Crore or USD 133 Billion by 2014. In fact, as early as 2012, the combined aggregate of the domestic IT services and product revenues, and Telecom services and product revenues will touch Rs 4,60,528 Crore or USD 100 Billion.

Table 3. Overall India IT Services, ITeS, IT Products, Telecom Services and Mobile Phones Industry: Size and Growth Forecast, 2010-2014


Source: CyberMedia Research (CMR), 2011

For a copy of CMR’s 2-part study of the India ICT Industry titled “India IT, ITeS and Telecom Services and Mobile Handsets Industry MarketView 2011″, please write to vbhatnagar@cmrindia.com.