Bfsi Heads It Spenders

BFSI heads IT spenders, retail rising star Dataquest-IDC India study reveals traditional large IT spenders like BFSI and telecom remain on top in terms of absolute spend Tuesday, May 27, 2008 NEW DELHI INDIA: A dozen of the country's Banks feature in the Top 50 Indian IT spenders list. These include Bank of Baroda, Bank of India, Canara Bank, City Union Bank, Corporation Bank, ICICI Bank, Indian Overseas Bank, Karnataka Bank, PNB, SBI, Syndicate Bank and United Bank of India. CyberMedia flagship magazine Dataquest and IDC India study reveals that traditional large IT spenders like Banking, Financial Services and Telecom remain on top in terms of absolute spend. The Dataquest-IDC Survey among 211 large IT user companies in India revealed that they spent 27 percent more on IT in 2007-08 as compared to 2006-07. During 2008-09, the survey expects these companies to invest 22 percent more on IT. For purposes of this study data for 11 large players, including six telecom players, was additionally obtained through secondary sources. Telecom and BFSI companies remained top IT spenders with average IT spend per company touching Rs. 191.6 crore and Rs. 87.5 crore respectively in 2007-08. In the BFSI segment, large investments were also made by LIC, NSDL, National Insurance, New India Insurance and Oriental Insurance. The new generation grocery stores from big corporate groups are banking on technology to compete in the low-margin, high-growth organized retail business. The IT investments in the retail sector grew the highest, at 43 percent. The retail industry is leading India Inc. in terms of growth in average IT spend. The average IT spend for a retail player was Rs 7.4 crore. "We did expect the retail sector to be a heavy investor in IT," says Prasanto K. Roy, Chief Editor, Dataquest. "But this young sector is also showing surprising maturity on the IT adoption curve. For instance, through its clear preference for off-the-shelf, packaged software, rather than the tedious process of custom development that most other sectors tend to go through." The top spenders on IT from the telecom sector included Bharti, BSNL, Hutch, MTNL, Reliance Telecom and VSNL. The IT and BPO companies form the next lot of big IT spenders and include Aricent, iGate, Infosys, ITC Infotech, Mastek, Mphasis, Sasken Communications, Wipro and Zensar. The lower growth in IT investments is expected across all sectors in 2008-09 except the pharmaceuticals and biotech sector that is expected to invest about a one-fifth more than their IT investments in 2007-08. The growth in investments in the utilities sector is expected to slow down from 30% in 2007-08 to 10% in the current year.

The highest IT spend as a percentage of overall revenues was reported by the BFSI sector that invested 1.5 percent, compared to the overall industry average IT spend of 0.63 percent of the revenue. The utilities sector led in terms of IT spend per employee, with a budget of Rs. 83,000 per employee, much above the overall industry average of Rs. 36,000 per employee. The Dataquest-IDC Mega Users survey, now in its 5th year, is the only independent survey that tracks the IT spending patterns among large enterprises from both primary and secondary sources. One of the significant findings is the change in spending pattern among Indian large IT users. Hardware, that accounted for 43 percent of the IT budget of these companies in 2007-08, will account for only 41.6 percent in 2008-09. The share of hardware will be picked up by services, which will account for 26.5 percent in 200809, as compared to 24.9 percent in 2007-08. The share of package software in the overall IT budget will hover around the same level of 26 percent. Retail, still a nascent industry in India, is going for standard software in a big way and spent 38 percent of its IT budget on package software. The Dataquest-IDC survey expects the large IT spenders to invest the most on basic enterprise-wide IT infrastructure in the next two years. These would comprise Enterprise Resource Management, Virtual Private Network and Wide Area Networks. This trend is expected from companies expanding their operations at a rapid pace. Customer Relationship Management (CRM) and Business Specific Applications will also see significant spend increase to handle growth in the consumer sector, and maturing of IT spending in BFSI and IT verticals. The large spenders from among the oil and petroleum sector included Bharat Petroleum, GAIL, Hindustan Petroleum, Indian Oil and ONGC. The automobiles sector threw up Ashok Leyland, Maruti and Tata Motors in the list of 50 large IT spenders. Additional findings * In terms of distribution of IT by business functions, while enterprise-wide IT accounted for the lion's share of 46 percent of the total IT budget, business specific IT solutions accounted for the next biggest chunk of 21 percent. * The retail sector spent the maximum share of IT budget (49 percent) in business specific solutions. * The retail sector will continue to lead the growth in 2008-09 as well, with a projected growth of 36 percent. In BFSI, IT investments will grow at 27 percent, the second fastest growing vertical for IT. ©CIOL Bureau