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IT majors look to government contracts to beat slump
By siliconindia
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Thursday, 19 February 2009, 19:29 IST
Mumbai: Since the private sector is floundering owing to the ongoing credit crunch, Indian IT firms are betting big on the government expenditure. The Indian IT vendors expect their revenues from the government projects to go up dramatically in two years, reports The Economic Times (ET).
In the interim budget, the government of India has announced its plan to spend more on IT in defense and homeland security, education, public support systems and general administration. The government's IT spend is estimated to be around $4 billion in 2010-11. It was $580 million in 2007-08. As per the government's announcement, its defense expenditure will go up by 24 percent to Rs 1.4 lakh crore in 2009-10. Of this, Rs 58,000 crore is meant for capital expenditure, which also encompasses IT spends.
Industry observers feel that at least 10 percent of the defense capex, or Rs 6,000 crore, would be spent on revamping technology this year. But an exact figure on this was not available. This will be targeted towards mapping technologies, surveillance, reconnaissance (reconciling enemy data from various sources) and intelligence.
"Defence is one area where we are witnessing increased government interest. We also expect higher spend on technology upgradation and advancement in homeland security," said KK Singh, CMD, Rolta India. The company earns one-fourth of its revenues from the government projects and has a technical tie-up with Thales, a French defence solutions provider.
India's IT exporter Wipro also expects growth in business from the government, including defense sector. "We are also looking to tap the power and education sector in India," Wipro's joint CEO Suresh Vaswani said. At present, 10-15 percent of Wipro's India business comes from the government projects, including defense.
HCL Technologies also sees greater opportunity in this space. "We see a robust growth in the government projects owing to the increased IT adoption and budgetary spends in India," said HCL president (Europe) Rajeev Sawhney.