IT/ITeS market could grow at 13.4% in 2009

Written by Corporate Bureau | New Delhi | Updated: Jan 2 2009, 04:52am hrs
The domestic IT and ITeS, which was expected to make up for the dwindling exports, is now expected to register the slowest growth rate since 2003 in 2009 as a result of the global financial crisis. According to research agency, IDC the domestic IT/ITeS market will grow at a CAGR of 16.4% for the next five years as compared to an average of 24.3% recorded during 2003-08. Its not only the end of another year, its also the end of a business cycle that began in 2003, said Kapil Dev Singh, country manager, IDC India.

However, the domestic IT and ITeS market crossed the psychological Rs 1,00,000 mark by reporting revenues of Rs 1,01,031 crore in 2008, which is a growth of 17.3%. The outlook for 2009 is weaker, as IDC expects the market to grow at a rate of 13.4% in 2009. 2009 shall herald the beginning of a new business cycle that will be marked by slow growth but would eventually be the basis of a new phase of growth, said Singh. As per the report, global economic meltdown will bring about important structural changes, which will propel a new market order in the domestic Indian IT/ITeS industry termed growth phase 2.0.

However, India will continue to lead the pack among APAC nations with 11.4% growth in domestic IT spending projected for 2009. The top five growth markets in the APAC region are India, China, Vietnam, Thailand and Philippines. The economic slowdown is expected to bring the focus on cost savings, productivity enhancement and customer retention resulting in new engagements and delivery models in the long run. As a result, technologies that deliver significant cost savings such as virtualisation, unified communications and open source will see higher adoption in 2009.

Also, the telecom space would continue to grow at higher than average growth rate and will be the least impacted by slowdown. The economic slowdown is also expected to accelerate the adoption of outsourcing services by the Indian companies. However, low-end volume services will find margins coming down because of increased competition. There is also expected to be a wave of consolidation in the space. All this will drive business transformation services in 2009. However, the delay in the 3G rollout and dismal performance on the broadband adoption front will affect the emergence of Consumer 2.0. The report also expects the security solutions space to grow by 20% in 2009 in the wake of the recent terror attacks and the rising cases of data theft.