Top firms’ IT spend up 27% in FY07: survey

Top firms’ IT spend up 27% in FY07: survey
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First Published: Wed, May 23 2007. 05 07 AM IST
Updated: Wed, May 23 2007. 12 19 PM IST
New Delhi: Top companies spent Rs7,123 crore on IT systems in 2006-07, a growth of 27% over the previous year, with PSUs forming a major part of the top 50 spenders, according to a survey.
The Dataquest-IDC MegaSpenders 2007 survey said the growth rate of IT spend by top enterprises is expected to be 26% in 2007-08, taking the combined spend to Rs8,974 crore.
This marginal decline in growth rate is due to reduction in costs of IT inputs as the nature and pattern of IT adoption becomes more sophisticated.
Interestingly, more than half the top 50 spenders on IT during 2006-07 were PSUs, breaking the myth that modernization processes such as automation and IT deployment can take place only after privatization. Banking financial services and insurance (BFSI) and telecom sectors emerged as the biggest spenders. “The survey points to a healthy growth in IT investments beyond the banking, financial services and telecom sectors. Utilities and automobiles were equally aggressive in investing in IT,” said Dataquest chief editor Prasanto K. Roy.
“These IT MegaSpenders of India Inc. set the tone for the domestic market, which had an annual growth of 27% for the previous three years. The projected growth at a nearly similar level for this year is great news,” Roy added.
The average IT investment by an Indian firm was Rs34 crore in 2006-07 and is expected to grow by 26% to Rs43 crore this financial year.
Investment of Rs2,646 crore by 35 banks, financial institutions and insurance companies was the highest among the IT buyers.
The top 15 IT buyers from the BFSI sector also made it to the top 50 in the survey.
These included Bank of Baroda, Bank of India, Canara Bank, Centurion Bank, HDFC Bank, ICICI Bank, IDBI Bank, Indian Overseas Bank, ING Vysya Bank, Karnataka Bank, Punjab National Bank, State Bank of India and Syndicate Bank. Insurers Life Insurance Corp., New India, Oriental and United India Insurance were also among the top 50 buyers.
In 2007-08 as well, the BFSI sector is expected to remain the highest inductor of IT with expected investment of Rs3,368 crore, says the survey. The telecom sector pumped in Rs2,314 crore on IT during 2006-07, with the highest average IT investment of Rs289 crore for each company. These included Aircel, Bharti, BSNL, Hutch, MTNL, Reliance Communications and VSNL. IT investments by the telecom sector is projected to increase to Rs3,031 crore this year.
The sunrise IT and ITES sector invested Rs652 crore during the last financial year. This resulted in 23 mega spenders, including Mphasis, NIIT, TCS, Wipro from the IT and ITeS sector, investing an average of Rs34.32 crore.
Retail sector is expected to increase its IT spends by 41% while the utility, telecom and BFSI are expected to grow at 35%, 31% and 27%, respectively. About 42% of the total spend on IT was on hardware while expenditure on packaged software and services software stood at 26% each.
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First Published: Wed, May 23 2007. 05 07 AM IST
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