IT spending by Indian companies to rise 17%: IDC

By agencies   |   Monday, 25 April 2005, 07:00 Hrs
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BANGALORE: Fuelled by over the top growth in telecom and insurance verticals, IT spending by domestic companies will increase 17 percent this fiscal over 2004-05, research firm IDC has said.

''A more robust growth in IT spending is expected this year in the large enterprise segment, to the tune of 17 percent as compared to the year just concluded,'' IDC India Head (User Research) Parijat Chakraborty said today.

PC and PC servers and ERP applications are the top two items in the buying list of the CIOs for the coming year with 32 percent and 23 percent of them respectively stating that they would invest the most on these products.

''Telecom and insurance are the two sectors that make an exception and plan to spend maximum on networking,'' IDC India said.

As per the recent DQ-IDC Megaspender Survey-2005, IT spending increased 11 percent in 2004-05, which was a marked improvement over 5.5 percent growth witnessed in 2003-04.

''This reflects that Indian companies are not looking at IT from a basic infrastructure perspective but are increasingly aligning it with their business strategies. Going forward, this trend is likely to continue, with enterprise applications securing higher places in IT spend priority list of the top CIOs,'' Chakraborty said.

This rise in spend last fiscal was due to massive growth in telecom and insurance verticals. Banking and telecom continues to be the two dominant verticals as far as individual IT spending is concerned, with 13 out of top 20 companies belonging to either of these verticals, IDC India said.

Even though both these verticals are traditional heavyweights in terms of IT spend, this year they have even bettered their tally of 11 companies featuring in last year's top 20 list, it added.

There is also a marked change in the IT spending pattern by companies as compared to 2003-04. Compared to the last year's 51 percent, only about 40 percent of the total IT spend is on hardware in 2004-05.

The hardware spend has grown in absolute term and still contributes the largest share in the overall spend. However, the growth in packaged software and services has outshined everything, increasing from 24 percent in 2003-04 to 30 percent in 2004-05.

The spending on services has gone up to 22 percent in 2004-05 from 17 percent in 2003-04, IDC India pointed out.

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