CIOs to lose IT spend, marketers to gain

Spending on information technology in India will rise 9.1% to $79.8 billion in 2012, more than twice the global average of around 4%, no matter the wobble in the global economy, according to Gartner, the consultancy.

Companies will continue to invest in IT, going forward, is the refrain.

Peter Sondergaard, senior vice-president and global head of research at Gartner, said, while North America will see very moderate growth, as will Japan, which has been hit hard by the current economic situation, Indian IT spend is set to grow at a pace of 8% in 2012, higher than in other markets.

“Western European markets, which are looking at cost optimisation, will also increasingly begin to buy from India, boosting India’s IT growth further,” he said.

Partha Iyengar, head of research - India, Gartner said there are two reasons why the current economic situation will not affect Indian IT spend.

“The first is the currency aspect, according to which, in terms of dollars, which is stronger, IT spend is projected to reach $79.8 billion by 2012. The other factor is that IT companies have realised that even in the last recession, cutting down on IT spend negatively impacted growth, and thus they will continue to invest in IT, in order to survive in an increasingly competitive world,” Iyengar said.

Salil Godika, chief strategy and marketing officer, Happiest Minds, the Bangalore-based start-up, remarked: “There has been an increase in first-time outsourcers. Many companies which have not reached the billion-dollar mark are now open to outsourcing, hence making India their preferred choice. Experts believe that even if there is a slowdown, companies have to look at India to reduce their overall costs. Also, they have to invest in automation processes which will bring in efficiency.”

Gartner’s forecast shows that worldwide IT spending will reach nearly $3.7 trillion in 2011. Of this, emerging economies will account for a third, or $1.01 trillion.

Its research shows two-thirds of CEOs believe that IT will make a greater contribution in this decade and will be a driver of economic growth.

By 2014, Gartner predicts that chief information officers (CIOs) would have lost control over 25% of their IT spending, and instead by 2017, the chief marketing officer’s  IT spend will increase, as marketing becomes increasingly digitised  — pointing to an increase in service providers and IT spend to be diversified to other segments.

Moreover, optimisation of infrastructure and shared infrastructure to bring down IT costs, will lead to savings in the organisation which can be in turn used to invest in newer IT technology.

One of the gamechangers propelling IT in organisations going forward will be cloud computing. Sondergaard said, “Cloud is becoming the industrialisation of IT.  While earlier, cloud computing made up 3% of the IT spend per year, this figure is set to increase to 19% in the next four-five years, in turn contributing to four-five times of the IT budget for organisations. Going forward, cloud, mobile, social media and information will be the four trends that will change the way we look at IT.”

Gartner underscored the shift from the personal computer operating systems such as Windows to mobile ones such as Android.

While about 20 million tablets were sold in 2010, this figure is expected to rocket to 918 million tablets by 2016, which would mean every eighth person will own a tablet.

For affluent customers in India, this means tablets will become the platform of choice and will drive mobility.

In addition, by 2014, 60% of organisations will have a private app store - pointing to the growing trend of social media, and its integration within the organisation, making it a part of social computing. Keeping this in mind, the computing hardware market in India is projected to reach $10.7 billion in 2012, and software spending will total $3.2 billion.

Akhilesh Tuteja, head of IT advisory partner, KPMG, said, “There is a growing maturity among consumers who no longer are happy with the gadgets they are offered. Consumerisation of IT is the next big thing and is fast gaining popularity in India.”

Gartner estimates show that telecommunications is the largest IT segment in India with IT spending forecast of $54.7 billion in 2012, followed by the IT services market, with a spending of $11.1 billion.

With inputs from Suparna Goswami Bhattacharya