Solutions In The Spotlight

With the economy gradually picking up the momentum, the scenario now seems
bright for the IT manufacturing and trading space. The demand in the market is
picking up at a low pace and enterprises are gradually rejuvenating their
expansion plans which were previously withheld on account of the slowdown, the
picture this year looks quite promising. It was in the backdrop of the said
limelight that IDC India decided to offer its predictions for solutions for the
year 2010 to the delegates at the SP Summit.

Informing the delegates about the growth rates in the nation, IDC said that
the Indian Domestic IT market has been forecasted to grow at a CAGR of 20.1
percent for 2003-13 out of which it had predicted that in 2005-2007 the industry
will see peaks with more than 25 percent growth YoY. However, with the recession
setting and affecting most of the sectors adversely, the telecom and public
sector units remained impervious. Sharing his thoughts about FY 2010-11, Arpan
Gupta, Sr Research Manager, IDC India said, "There are strong evidences of
bottoming out, but winds of caution remain. We expect the domestic IT market set
to revive in 2010."

"2009 was typically a bad year for hardware deployments in the sector with
major products like PC and servers taking a dip by almost 15 percent; however,
2010 would be the year beyond ERP and SCM, enterprises increasingly turning to
IT investments as part of their growth and competitiveness strategies. The
technologies for 2010 will primarily evolve around infrastructure management
resulting in virtualization and process efficiencies amounting to UC," Gupta
added. Further, with large service providers being tied to the top IT vendors,
IDC claimed that the potential lies with the new entrants and the smaller
players who are ramping up their infrastructure to scale pan India. With Mobile
Number Portability and Consumer 2.0 to drive the market in 2010, the prime focus
will be on expansion technologies with more and more tie-ups in sectors like
banks and financial institutions looking for rural penetration. "With a positive
sentiment returning in 2010 and with Indian and international retail chains
forecasted to grow their presence, the year would see implementation of single
enterprise-wide IT platforms to manage operations. Also, after ERP, the retail
segment is expected to move towards optimization of the supply chain by mid-2010
and logistics, transportation and warehousing will gain further importance and
solutions addressing these business functions expected to see higher traction,"
elucidated Gupta.

Arpan Gupta Sr Research Manager, IDC India

Furthermore, with digitization and online delivery platforms gaining higher
focus recently, software is expected to be the key growth area compared to
hardware as requirement for licenses for creation and delivery of content in
soft formats. With expansion on the cards, outsourcing, particularly managed
services is expected to witness good traction; a new wave of 3D technologies at
cinema halls and digital delivery platforms is predicted to have started
impacting the sector more profoundly. Also, with increasing deregulation and
privatization in the power sector, the industry is getting increasingly exposed
to the latest IT solutions available leaving a wide scope for the SPs to contend
in this segment.

The next phase of technology investments, according to IDC is to happen for
improving process efficiencies like UC and virtualization along with the
adoption of SOA. Recent initiatives taken by the state electricity transmission
companies to introduce automatic metering systems has been driving the need for
IT adoption in the power sector.

With healthcare evolving as a prime vertical for the IT segment on account of
the CRM system and online transactions, IDC predicted that in its first phase of
computerization, various state governments are expected to integrate their
healthcare delivery systems at various levels starting from district hospitals
to primary healthcare centers enabling induction of hardware. Also, new
applications like telemedicine and e-prescriptions penetrating into the
vertical, software spending is expected to increase over the next five years
empowered with an increased focus on integrated billing and online availability
of patient records across hospitals.

As SMBs continue to rule as the primary target segment for the SPs across the
nation, the vertical needs special focus. "While the large and very large
segments faced a decline in 2009 over 2008 in terms of their IT spending, it was
the SMB enterprise segment that managed a growth of 7.5 percent YoY," Gupta
emphasized. Key factors that hampered the growth of SMB IT spending till 2008
were lack of IT awareness, lack of vertical specific solutions and unclear RoI.
In 2010, however, IDC said that the vertical will be informed better in terms of
IT and will seek for customized and tailor-made solutions, especially on the
networking, virtualization, managed services and regulatory compliance front.

Speaking over the market scenario this year, segment-wise in terms of IT
spending and budget, Gupta said, "Telecommunications will get the maximum
leverage this year while the IT/ITeS, banking services and manufacturing will be
re-aligning this year. Also, government, education, healthcare, pharmaceuticals
and utility services will emerge. However, in retail, insurance, finance, and
entertainment sector, the budget will be quite low and these sectors will take
some time to recover." The slowdown has indeed changed much of the market
statistics and conceptual figures. Highlighting the same, IDC informed the
delegates that concept selling rather than selling the product or resorting to
pushing the 'box' is now evolving. While growth of the SPs in terms of margins
continues to be the determining factor, revenue sharing also needs to be looked
into. Also, SPs dealing in software need to focus on annuity business giving
them optimal returns throughout the year rather than merely sell license which
is 'one time' selling.

Speaking over the emerging concepts and the hot solutions this year, Gupta
said, "Virtualization, SOA and cloud will be of primary importance for 2010.
However, simulation has also emerged and this new entrant will also drive growth
in IT solutions this year. Besides, ERP and CRM which are the regulars will also
drive the industry."

Offering the delegates an overview of the market, IDC also recommended the
SPs to tune their business in the changed dynamics of the recovering market. The
leading market research agency, while sharing the predictions for 2010 asked the
SPs to look for their own business models in line with the economic curve
shaping up and penetrate across different industry verticals. Besides, the
agency advised the attendees to gain mindshare on new enterprise solutions and
technologies and concentrate on services business.

Avishek Rakshit

avishekr@cybermedia.co.in