India to emerge as fastest growing ICT market globally: study

Tuesday, 21 January 2003, 08:00 Hrs
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NEW DELHI: The Indian information and communication technology (ICT) industry is expected to grow by 25-30 percent in the current calendar year, making it the fastest growing market in the world, said a study report Monday.

The study, conducted by global technology industry research major Gartner Inc., said the sustained global economic slowdown would continue to work in India's favour.

"Government spending will provide a significant dimension to the domestic growth in ICT, as both the central government and some key states start or continue strong investments in e-governance and related applications and infrastructure," it said.

Gartner said the domestic ICT industry would also get a boost by the ramp up of internal technology infrastructure of state-run companies, mainly public sector telecom firms.

"Whether or not specific public sector undertakings are candidates for privatisation, the requirement to become competitive with private enterprises is a key imperative in every sector," the study said.

Said Partha Iyengar, vice president and research director of Gartner India: "There is unabated growth in the IT services market in the export sector coupled with significant IT services growth in the domestic market.

"Even the large Indian IT services companies are starting to focus on the domestic market seriously for a reasonable portion of their overall growth projections for the year."

On India's booming business process outsourcing (BPO) sector, Gartner said the global economic slowdown would work in India's favour, making it hard for enterprises to ignore the "huge cost arbitrage" the country offers.

"The year 2003 will be the year for consolidation of the BPO industry in India," said Sujay Chohan, vice president and regional director (offshore BPO) of Gartner Inc.

"The future looks promising as the BPO industry is set to grow, but the business case should be approached with a clear long-term perspective," he added.

Over the next couple of years, the BPO industry will make slow but steady progress "with a few casualties along the way due to unrealistic expectations of some Indian providers," it warned.

"Control and security issues will also result in increasing competition for Indian companies from other English speaking states, especially those near shore to the U.S. or Britain.

"The shake out and consolidation in the Indian BPO landscape will continue as realisation dawns that BPO is a highly capital intensive business with long gestation periods and not a valuation game.

"Overall, however, India will remain the undisputed leader as an offshore BPO destination. The industry size will grow and investments in captive units of large multi-national companies will continue to be the key driver in the industry."

On the growing competition between India and China in the technology sector, the research firm said China is more significant to India as a huge market than as a competitor for IT services.

"While China is a significant market and companies that penetrate it properly will prosper, it is not as simple as opening a branch office in Shanghai and waiting for the orders to roll in.

"Success in China will require an understanding of both the market and cultural issues, which few enterprises possess."
Source: IANS
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