India's small towns next frontier for ICT growth

Information and communication technology spending in the subcontinent is expected to hit US$71.9 billion in 2011, reports Gartner, adding that the rural areas present growth opportunities for IT vendors.

Information and communication technology (ICT) spending in India has returned to growth this year as the country recovers from the global recession, said Gartner in a recent report.

In a statement released Wednesday, Gartner said ICT spending in India is expected to grow 10.3 percent from US$65.23 billion in 2010, to reach US$71.9 billion in 2011. ICT spending has returned to growth in 2010, as companies recover from the global recession that ended in 2009, the research firm said.

The recession has led to companies being cautious in 2009 as they focused on better "utilization of existing resources and driving efficiencies of infrastructure", said Peter Sondergaard, senior vice president and global head of research at Gartner, in the statement.

However, ICT spending is headed for growth this year, with Gartner attributing this to the pent-up demand following the budget slowdown; replacement and adding of hardware; as well as the country's massive consumer segment.

Sondergaard added that the consumer market will be driven by the country's large young working population, rapidly rising middle class, and emerging opportunities in the services sector.

Rural areas the next frontier
Apart from the consumer market, India's small towns and cities present growth opportunities for ICT spending, noted Gartner. "Growth within smaller towns and cities will provide the next level of opportunity for IT vendors across categories," added Sondergaard.

Reflecting this trend is the hardware segment, which is expected to be the fastest-growing ICT area throughout 2014, according to the research firm. It added that the segment will be driven by spending in client computing, which in turn is being driven by increasing rural prosperity and growth in the small office and small business segments.

Gartner predicted that spending in the hardware segment will grow at a compound annual growth rate (CAGR) of 20.4 percent to reach US$16.15 billion in 2014.

Close behind is the IT services segment, which has been forecast to grow at a CAGR of 17.1 percent to achieve US$13.69 billion in spending by the end of the period, said Gartner.

Coming in third is the software segment, which will obtain a CAGR of 13.4 percent to bring in US$3.96 billion in ICT spending, according to the report.

The telecommunications segment will remain the largest ICT spend at US$61.67 billion in 2014, according to Gartner. However, compared with growth in other segments, telecom spending will be the most sluggish at a CAGR of 7.9 percent.

Total ICT spending in 2014 for India is expected to reach US$95.47 billion, said Gartner.