NEW DELHI--The growth rates may have slowed down, but Indian IT looks poised to sail through the gloom in the global economy with growth areas in cloud computing, mobile-commerce and business intelligence.
"There are clear indications of a slowdown in China, India and other emerging markets. The Indian economy will not remain unaffected by the crisis in the Eurozone," Rajeev Gupta, India president of Fujitsu Consulting, told ZDNet Asia in an e-mail. Fujitsu Consulting is the consulting and services arm of the Fujitsu group, providing IT consulting, implementation and management services.
Research firm Gartner saw a market slowdown in the second half of 2011, and several contracts did not materialize due to apprehensions stemming from the sovereign debt crisis in Europe, Arup Roy, principal research analyst, said in a phone interview.
"These apprehensions have a direct bearing on the IT spends," he said, but added that the domestic IT industry was still projected to grow by 14 to 15 percent this year.
Ramanan R.V., executive director and president of global delivery at Hexaware Technologies, concurred. "If we look at IT-ITES (IT and IT-enabled services) industry, with the context of global macro-economic scenario, the industry is likely to witness growth in 2012." Hexaware is an IT and business process outsourcing services provider.
Year of margin pressures, consolidation
2012, however, is not likely to be an easy year for Indian IT.
"We will face more margin pressures as clients look to improve efficiency and keep costs low in their outsourcing models," Gupta said, adding that there will also be market consolidation. "Small and midsize companies facing the heat will try to monetize their investments and exit."
On the positive side, attrition will fall in the short-term as employees become more cautious about frequent job changes in an uncertain global economic scenario, he noted.
Ramanan said: "The IT-ITES industry this year will have a significant role to play in driving the revenue growth of clients and bringing about operational efficiencies and cost reduction."
According to Phil Fersht, founder and CEO of HFS Research, in 2012, companies will outsource entire IT capabilities and stop investing in their own infrastructure and building or buying applications.
Three areas, however, will see strong interest: mobility products; cloud as a platform; and social media.
"These three areas have garnered the maximum mindshare of most CIOs," Ramanan said, noting that companies are exploring if these can fit seamlessly with the traditional IT landscape to provide greater value.
"For instance, we launched a private cloud, Rainmaker, and hosted all our internal applications on the cloud through which we cater to 8,000-plus employees in over 30 countries," he said.
Fersht also described 2012 as "the year of cloud computing".
"Companies are poised to buy cloud-enabled technology that allows them to focus on their business, and not 12 month-long slogs through another global ERP (enterprise resource planning) implementation," said the analyst.
While 2011 saw customers discussing cloud computing and the probability of adopting a cloud strategy, there were in fact little adoption.
"The year mainly focused on creating consensus among CIOs and CTOs to analyze the impact cloud computing can have on businesses," Anil Bajpai, senior vice president and head of research and innovation for iGate Patni, said in an e-mail. iGate acquired Patni Computer Systems in January 2011.
From 2012, Bajpai expects low-cost cloud-based projects to pick up, especially those which do not necessitate heavy investments.
Fersht, though, believes cloud is already mainstream. "Organizations are no longer sitting on the fence. They are building new business services from this technology platform that are integrated into mainstream IT, he said.
In addition, cloud management will become big ticket this year, he said.
"Moving from strategy to implementation means policies, technologies and management expertise are required to manage cloud investments," Fersht explained. "Moreover, CIOs need an integrated view of their enterprise IT environment."
Hanuman Tripathi, group managing director of Infrasoft Technologies, expects smaller banks across India to accept shared-services model when deploying core banking processes. "This will open a new leaf in IT industry, strengthen co-operative banking industry, improve economic health of smaller banks and boost financial inclusion," Tripathi said in an e-mail interview.
M-commerce, social media to pick up
Besides cloud, mobile is also expected to propel Internet usage in India and enable services delivery in the country's untouched geographies.
iGate's Bajpai said: "In the wake of explosive mobile phone penetration, mobile commerce and near-field communication will see a surge in 2012 and serve as pivots for an intelligent ecosystem toward customer delight." For instance, advertisements on mobile phones customized to a user's location and preference will become mainstream, he noted.
Moreover, mobile payments are expected to revolutionize the transactions scenario, he added.
"Tightening the biggest challenge of security on this platform will ensure user concerns are allayed, thereby, making this platform much more popular than Web-based banking in the near future," Bajpai added.
Fersht said: "Up until 2011, marketing madly drove their IT departments to invest in social media, drive e-commerce and build online relationships." This year, he said, businesses will "drown in millions" of tweets, blogs, location-based data and forums.
Bajpai added: "Over the next two years, we will see social media applications being created by traditional technology companies such as Microsoft, Google and Apple; committing themselves to interoperability and platform-agnosticism."
Security, BI to gather momentum
Security vendor McAfee had dubbed 2011, "the year of hack", marked by change, challenge and chaos in information security history.
"With threats evolving in their sophistication, pervasiveness and frequency, the profile of a hacker also underwent a transformation owing to increasing rise in cybercrime that were designed to go under the radar and steal sensitive data from individuals, businesses and governments," Michael Sentonas, McAfee's vice president and Asia-Pacific CTO, said in a statement.
Bajpai said: "In sectors that are concerned with confidential data or regulatory compliance, where security is key, we are seeing the use of zero-footprint applications whereby the application doesn't save any data, code, link, history and temporary files on the device." Zero-footprint applications run on Web-based servers and can be accessed on either a traditional PC or a mobile device such as tablets.
"Zero-footprint technology will see an increased adoption in 2012, particularly in markets such as the U.S. and Europe which have laws like Health Insurance Portability and Accountability Act, Sarbanes Oxley," he added.
According to Ramendra Mandal, country manager of QlikTech India, the BI (business intelligence) market in India is in high growth phase. It is currently clocking a year-on-year growth of 15 to 20 percent, and this growth is likely to continue in 2012.
"Apart from the traditional big spending sectors on BI like banking, financial services and insurance, telecommunication, the government, we see a large demand for BI software from midsize enterprises," Mandal added.
HFS Research's Fersht agreed: "In 2012, marketing needs to make investments in BI that will allow them to analyze millions of unstructured, disparate data points to build and protect brands, develop closer relationships, and drive revenue growth."
Mandal added: "As the awareness about BI software increases, other verticals such as retail and distribution and hospitality are also expected to invest significantly in the BI software solutions in the Indian market."
Swati Prasad is a freelance IT writer in India.