Most large Indian firms to increase IT spend this year

Enterprises in the country today spend an average US$12.2 million on IT, pumping their investment in cloud, virtualization, datacenter consolidation, and IT modernization, according to a Gartner survey.

India's average IT enterprise budget has hit US$12.2 million. What's even better, three-quarters or 75 percent of large Indian enterprises are planning to increase IT spending in 2013, according to a Gartner survey.

"India is one of the fastest-growing IT services markets in the world. Indian service providers have an opportunity to capitalize on planned increases in IT spending among Indian enterprises in 2013," Gartner said in a statement today. The market researcher surveyed 1,523 large enterprises worldwide, with over 1,000 employees, between June and September 2012 to determine their IT spending plans. Of these, 153 respondents were in India.

Indian companies' IT priorities in 2013 are the cloud, particularly infrastructure-as-a-service (Iaas), virtualization, datacenter consolidation, and IT modernization, said Arup Roy, research director at Gartner.

Compared with other markets, India offers a welcome opportunity for service providers looking for new business. "Indian IT budgets continue to rise, and the categories of spending continue to widen in the coming year," Gartner said. According to the research firm, approximately 10 percent of spending in 2012 was allocated to external services, 14 percent of which funded cloud-related initiatives.

"Similar ratios are expected in 2013. There is a greater inclination toward private cloud contracts, more than in any other market this year," Roy added.

About 30 percent of large Indian companies said control of IT budgets was shifting toward business units, including marketing, the CFO office , and lines of business. "As budget-control shifts occur, when all budgets become IT budgets, service providers must take a multipronged approach and not target only CIOs," Gartner said.

In line with the trend observed in other countries, the biggest IT spending in India was in the communications industry, followed by banks and securities. As banks embark on their next phase of transformation into more competitive customer-friendly institutions, key opportunities are likely to come up in the areas of core banking systems and upgrades or integration with other peripheral systems.

Near-term opportunities in the banking sector will be in the areas of collections, contact center services, business intelligence, mobility and IT outsourcing.

Relatively poor spending was seen in the vertical industries of insurance, government and utilities, setting India apart from other countries. Nevertheless, these markets are likely to offer strong opportunities for service providers.

"Some of the largest IT deals are starting to come from central and state government," Gartner said. Specifically, opportunities are emerging in state and central government bodies that relate mainly to efficiency, transparency, and e-enabling projects for citizen-facing services, as well as workflow-related projects.

Roy said:  "In most organizations the IT department controls the budget, which is centralized, but some control is shifting. This is more or less in line with other emerging and mature markets.

"The pace of this shift will be quite fast as cloud-based delivery methodologies mature, and organizations gain trust and confidence in them. In the next five years, we are likely to see more IT spending coming from the CMO's office , the CFO's office, and other lines of business."