India likely to emerge third largest infotech market -- IDC

K Baburajan

Bangalore, Aug 2: India is likely to become the third largest infotech market in the Asia-Pacific region (excluding Japan) by the year 2003 and the total infotech spending by the country is expected to grow by a compounded annual growth rate (CAGR) of 28 per cent.

Disclosing this here on Monday, IDC (Asia Pacific) vice-president Dane Anderson said: "The other leading countries in the Asia-Pacific (ex-Japan) region will be Peoples Republic of China and Australia." He was speaking on `Asian IT Market Overview' at the annual meet of IDC Corp.

According to him, the Asian crisis shattered the growth of information technology industry in the region during 1998. Factors like speculative attacks on Asian currencies, Indian nuclear tests in May 1998 and dwindling commodity prices across the region curtailed growth. Hence, total infotech spending growth in US dollar terms was dismal last year.

According to Anderson, key Asia-Pacific market accelerators are:

Economic improvement

Low penetration, particularly in the consumer segment;

Hardware price erosion;

The internet;

China and India;

Government investments in IT for national competitiveness;

Import tariffs are likely to drop over the next five years.

Among the inhibitors that might impede growth are:

High degree of uncertainty in many markets;

Political stability in Malaysia, India and Indonesia;

Sino-US relations;

The Taiwan traits;

Underdeveloped telecom infrastructure;

Lack of local language software and content.

He said IDC was expecting the regional infotech market rebound to be too prolonged. "The commoditisation of the PC is challenging the entire regional IT industry ecosystem and forcing vendors to revisit their value propositions. However, the nosediving prices of PCs and other related equipment will have a positive impact on the industry," he added.

Only four Asian markets are expected to have 5 million internet users by the year 2003. Of this, the position of India will be second, while China will be the numero uno, thanks to its reform process and investments in IT. Apart from these two countries, Korea and Australia will also have a place in the internet map of the Asia-Pacific region.

Speaking on `Success Strategies for the New Internet Economy', Cyber Media India managing director Pradeep Gupta said: "Enormous demand for the latest products has forced IT firms to go in for new technologies. Products and services like Jini, P3P, Internet2, directory services, knowledge management and object databases are in the offing from infotech firms."

The ERP software market in the country was likely to see a 43.2 per cent growth in 1999-2000. The size of the domestic ERP market would be Rs 315 crore during the current fiscal from previous fiscal's Rs 220 crore, according to Nasscom president Dewang Mehta.

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