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Business News/ Opinion / Online-views/  IT opportunities in Indian defence

IT opportunities in Indian defence

IT opportunities in Indian defence


Market opportunities in Indian defence can be classified into two segments: combat and non-combat.

Combat opportunities for information technologies (IT) companies would pertain to optimum utilization of resources in a battlefield and to battlefield management systems, communication systems, naval IT architecture, and the like. This segment requires proven competence in developing and implementing systems in consonance with the Armed Forces, the end users.

Opportunities in the non-combat defence market are dynamic and open a new business landscape, which has attracted large IT companies, both Indian and foreign. The market landscape, products and segmentation here are vastly different from the combat opportunities, in the sense that IT companies can put to use their knowledge from enterprise resource management in the civilian landscape.

Non-combat opportunities in defence could relate to maintenance of inventory, defence logistics, e-maintenance of weapons and equipment, including aircraft, land systems and vehicles, and human capital and financial management.

In terms of revenue attractiveness, market opportunities in enterprises resource planning, supply chain management, product life management, networking and telecom are high. Intelligent systems and enterprise asset management in the context of modernization of the Armed Forces hold promise of lucrative market growth opportunities.

The landscape can be widened to include defence public sector companies and ordnance factories as well as the replacement of legacy systems, and we have a multi-billion dollar-market spread over the next 10 years waiting to happen.

Phased liberalization of the Indian defence market, along with firm defence budget commitments, has given a fillip to this opportunity. They have helped manage the risks in the typically long-term gestation period of defence contracts.

Companies such as Tata Consultancy Services Ltd and HCL Technologies Ltd have been early birds in this market. Of late, Wipro Ltd, International Business Machines Corp., BAE Systems-Hindustan Aeronautics Ltd, and Infosys Technologies Ltd have been making a concerted effort to enter this business.

We forecast the Indian defence market to be worth around $1 billion (Rs4,500 crore) in the next five years, the main drivers being the air force’s e-maintenance programme and the computerized inventory control programme for the army.

Besides, the fillip from the introduction of new weapons and aircraft as well as the introduction of modern naval crafts will add to the attractiveness of this market in terms of defence offsets.

Ratan Shrivastava is director, South Asia and Middle East, aerospace and defence practice, at Frost and Sullivan.

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Published: 25 Jan 2011, 03:25 PM IST
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