Bangalore: Market researcher IDC on 4 May sought to allay fears about an impending IT slowdown, saying there were no indicators that “we are headed for a downturn in global IT spending.”
“The macroeconomic indicators that IDC uses to gauge the strength and direction of IT spending do not indicate that we are headed for a downturn in global IT spending,” IDC chief research officer John Gantz said.
The key issues for the Indian IT export market would lie less in overall worldwide IT market growth and more in the internal dynamics around IT outsourcing, Indian labour supply, and competition from other regions, he said.
Speaking at IDC India’s “Directions 08” session here, he also urged the Indian software players to differentiate themselves in the global software market.
Indian software industry had built exceptional brand equity in the global markets by delivering quality software at reasonable cost, he said.
But, he cautioned, this competitive edge would begin to fade away in five-seven years. Building a new set of strong differentiators in the global markets would be a critical success factor for large players, Gantz added.
He said, India was a high growth and attractive market, “we expect a number of MNC firms like IBM, EDS and Accenture to scale their operations in India. However, their biggest challenge would be in managing large work force in their India offshore facilities,” he said.
Gantz said India’s custom development software market was growing at roughly three times the growth rate recorded by the worldwide market, that made it attractive for the MNC firms and venture capitalists to invest in India.
“This in the long run also spells threat for the Indian players,” he added.
The traditional IT areas were expected to record a CAGR of 7% worldwide during 2005-10, with US and Western Europe reporting a CAGR of 6% and 5% respectively.
The BRIC (Brazil, Russia, India and China) were expected to record CAGRs of 15%, 19%, 19% and 14% respectively from the traditional IT areas in the five years ending 2010. However, he said, the real opportunity lay in the “new” IT spending.
Gantz said the “new” IT spending areas include internet-based software and protocol for telecom networks, blurring the distinction between communications and IT. Huge amount of data and content in the form of text, sound and video was being uploaded by millions of people in an ever-expanding worlwide web, he said.
The new wave also includes services like business process outsourcing. In addition, content services worth $1 trillion were now being created in the form of ads, gaming and distribution, which was likely to grow six fold by 2010, as 70% of the new content would be generated by consumers.