82.5 lakh PCs sold in 2008-07

New Delhi Sep 9

According to Dataquest, a CyberMedia publication, the strong surge in the domestic IT market kept the momentum going for the Indian IT industry. The latest research stated that FY 2007-08 was memorable for two reasons-the rupee upstaged the dollar, and the domestic market for the first time in Indian IT's journey grew faster than the exports market.

An accelerated 34 percent growth in 2007-08 FY '08 as compared to 27 percent in FY '07, took the total domestic IT market to Rs 99,018 crore in FY '08 reversing the decade-old trend of export industry growing faster than the domestic market.

The overall Indian IT industry grew 29 percent in FY '08 to report revenues of Rs 2,88,810 crore. Exports, contributed largely by software and services, accounted for nearly two-thirds of the industry at Rs 1,89,792 crore, grew at 27 percent as compared to a 35 percent growth recorded during 2006-07. 

Pradeep Gupta, Chairman, CyberMedia said, "Despite the downturn and the challenging economic climate, the top IT services companies managed to keep growth up and their margins intact. This shows the amazing resilience of the Indian IT powerhouses.”

Within the domestic IT market the hardware industry, comprising personal computers, servers, peripherals, networking and storage products contributed one half-Rs 49,589 crore. And the rest was contributed by domestic IT services Rs 26,756 crore, which is 28 percent growth over the previous year and software Rs 12,179 crore, which is 27 percent growth over the previous year.

It further stated that BPO services (voice only) contributed Rs 8,600 crore (65 percent growth) and training Rs 1,894 crore.

Driven by the need for mobility, over two million notebooks were sold, registering a growth of 59 percent, growing at twice the rate of desktops. Notebooks now form nearly one-fourth of the 8.25 million personal computers sold in the year. 

Dataquest attributes the handsome showing by domestic hardware segment to the spread of computing to smaller towns and cities of India as well as the rise in small businesses. The desire to save energy on IT appliances has led many users to switch to LCD monitors. This resulted in an impressive 68 percent growth in LCD monitor sales.

Pen drives became a ubiquitous mass consumer product selling 4.2 million pieces in the year. Over one million digital cameras and 575000 MP3/MP4 players were lapped up by Indian consumers.

Vendor

Revenue (in Rs crore)

Growth

FY '08

FY '07

(%)

IBM

1,319

1,051

26

Wipro Infotech

1,102

850

30

HP

985

843

17

TCS/CMC

891

770

16

HCL Infosystems

452

330

37

Tulip Telecom

427

318

34

HCL Technologies

369

331

12

Sify

384

319

20

CMS Computers

360

320

12

3i Infotech

310

180

67

Datacraft

281

236

19

Siemens Information Systems

260

177

47

Accenture

250

205

22

Sun Microsystems

240

190

26

Rolta

204

125

63

Source: Dataquest Top 20 report on the Indian IT industry 2007-08

The growth of retail consumer banking led to deployment of 9,300 new ATMs, taking the total base of ATMs in the country to 34,500. This resulted in a revenue growth of 150 percent to Rs 699 crore. The study says that this segment will witness an accelerated growth in the coming years.

But there were some sectors that slowed down as well. IT services exports-one of the biggest contributors in the Incredible India IT story. After seeing a 39.9 percent growth in 2006-07, the momentum in the segment has slowed to 26 percent in 2007-08. 

According to Prasanto K Roy, Chief Editor, CyberMedia, “Exports may have slowed down, but the really exciting story was the consistent growth in almost every sector of India's domestic IT market: hardware and services, SMB and enterprise, government, etc."

"No longer were just a couple of verticals like banking and telecom driving most of the market growth, retail, education and a host of other areas also saw strong growth in IT spend," he added.

Infrastructure services emerged as the fastest growing segment in IT services exports registering a 126 percent growth. Infrastructure services were traditionally not considered for off shoring. However, in the last few years, the market attained growth momentum and the share of infrastructure services' contribution to the total IT services stands at Rs 11,959 crore or nine percent. 

The areas in the domestic IT market that failed to grow along expected lines were package software, networking and storage. In case of networking and storage the growth slowed down a bit, indicating that most companies have put in place the basic infrastructure and are now looking at extracting better value from IT and expanding the usage of infrastructure, as evident from high growth in hardware.

The performance of the peripherals segment, especially of printers, MFDs and consumables supports this. It indicates a growing trend of increased usage of IT, rather than the earlier phase of expanding infrastructure and not being able to use it optimally.

The slower growth in packaged software sales was a disappointment. Despite huge adoption of ERP by the small and medium business segment, the lack of spend on package software by the large enterprises meant the Indian IT industry is still waiting for the inflection point in adoption of package software. Only security software segment, thanks to the growing risk of malicious attacks and growing need for compliance, which showed 31 percent growth.

Dataquest estimates the market size with Indian rupee (INR) as the primary currency. In FY '08, for the first time, the rupee actually accelerated sharply against the dollar, resulting in very higher growth rates when calculated in dollar terms. For example, the entire IT industry grew 44 percent in dollar terms, as compared to 29 percent in rupee terms.