Bangalore: Buyers from the government and industries as diverse as retail, manufacturing and insurance will help technology spending by business consumers in India top?$10 billion (Rs41,000 crore) this year—an all-time high.
But 2007 is unlikely to be a year to celebrate for software vendors. For, they will sell less software used by enterprises in the year than in 2006; firms will buy about 14% less software compared with the year before, preferring to spend more on computer servers, desktops and networking equipment to manage customers and integrate their IT systems.
Leading software product vendors such as Oracle Corp have dropped their prices by almost 15% this year, “even as software product buying is expected to be down at $1.2 billion?from?$1.39 billion in 2006,” said T.R. Madan Mohan, director-consulting of IT consultant Frost & Sullivan’s India offices.
Of the $10 billion, the government and companies such as Bharat Sanchar Nigam Ltd, ONGC Ltd, Bharti Airtel Ltd and State Bank of India Ltd will spend $4.48 billion on buying new hardware, invest $4.2 billion in services such as system integration and spend just $1.2 billion on software products in 2007, as per Frost & Sullivan estimates. Of this, government spending on IT, expected to be more than $3 billion this year, will lead the growth.
Government departments such as the income-tax department will buy new servers and invest in software applications in the areas of geographical information system and treasury, “as they seek to consolidate information about the citizens and taxpayers,” said Mohan.
Big buying will also come from the manufacturing quarter. Driven by robust demand, automobile firms such as Maruti Udyog Ltd and Bajaj Auto Ltd are investing heavily in setting up new plants and offices, thereby increasing demand for new computer hardware and networking equipment. “One of the key business challenges for us is to manage this growth with the help of technology,” said Rajesh Uppal, chief information officer (CIO) of Maruti Udyog.
Auto major Bajaj Auto will spend Rs30 crore on new technology hardware and business applications in 2007. “We would continue our investments around SAP-based platform and will also roll out radio frequency identification (RFID) for our manufacturing operations,” said Bajaj CIO Anil Khopkar. SAP is the world’s leading enterprise resource planning software that meshes together business processes built around suppliers and customers.
Another RFID-user, India Post will “tag” around 800 sacks of mails being shipped between Delhi and Mumbai by February-end. The Indian railways has already invested around Rs2 crore in tagging around 1,000 wagons for automatic identification. If the railway ministry is satisfied with the outcome, it may invest up to Rs250 crore in tagging all wagons, say officials at the Centre for Railway Information Systems in New Delhi.
Retail and insurance will chip?in, too. “We will be spending Rs40 crore this year on overall technology investment and roll out RFID technology for tracking the inventory movement of textile brands at our malls,” said Pantaloon Retail CIO Chinar Deshpande.
The banking and financial services industry, which will spend around $2.2 billion this year, “will see banks such as HDFC Bank and Canara Bank buying more hardware- and customer-centric software as they expand their retail banking operations,” said Mohan.
“Managing complex infrastructure by introducing new products and channels coupled with growing customer expectations and growing mergers and acquisitions make technology (management even more) complex,” said Sanjay Sharma, IT-head of IDBI Bank in Mumbai.