Home >Politics >Policy >Tech push by railways a billion dollar opportunity for IT firms

New Delhi:

The National Democratic Alliance (NDA) government’s first railway budget, which envisages implementing Internet connectivity at stations and in trains, digitizing land records, integrating all its computer systems and achieving a paperless office in five years, has thrown up a billion dollar opportunity for technology firms in India, say analysts and industry experts.

On Tuesday, for instance, Union railway minister Sadananda Gowda said the Indian Railways will opt for an enterprise resource planning (ERP) solution, which is typically used to integrate freight, passenger, human resources and administrative operations across the country.

The railways have been toying with the idea of implementing an ERP solution for almost a decade but have done it in bits an pieces during the United Progressive Alliance’s (UPA’s) tenure.

For instance, on 26 June, 2007, Mint had reported that the railways was planning to implement an ERP solution that was compatible with the Freight Operations Information System (FOIS). In 2006-07, India’s largest IT services provider, Tata Consultancy Services Ltd (TCS) designed the ERP for the Indian Railway Catering and Tourism Corp. Ltd (IRCTC).

And on 6 June 2010, the Business Standard reported that L&T Infotech Ltd had won two turnkey ERP projects that were conceptualized and tendered by the Centre for Railway Information System (CRIS), the IT arm of the Indian Railways.

SAP is handling ERP for subsidiaries of the Indian Railways (these include locomotive factories, coach factories, etc.). Till last year, L&T Infotech was one of the vendors handling ERP implementation for Indian Railways.

In an emailed response to a query, L&T Infotech said the company is not managing the ERP implementation for railways anymore. TCS didn’t respond to an email seeking comment.

Gowda on Tuesday also said the Indian Railways plans to revamp the ticket reservation system to support online sale of 7,200 tickets per minute as against the current limit of 2,000, that Wi-Fi services will be made available in select trains as well as at major stations and that there will be digitization and GIS (geographic information system) mapping of land assets for better management and usage.

Similar announcements, with these specific numbers, had been made during the 2013-14 railway budget presented by the UPA government.

Gowda said there will also be a provision for real-time monitoring of trains, mobile-based wake up call for passengers and destination arrival alerts, and station navigation information system. This is in addition to the pilot project of providing paid workstations in select trains for business travellers, which will be launched this year.

Industry analysts say these measures can have a transformational impact on domestic IT industry.

“It (the railway budget) reinforces some of the key global trends such as mobility, social media and digitization. In today’s world, the things that can make or break an organization are agility and flexibility. Moving on to a mobile platform will help delivering on these trends," said Sanjoy Sen, senior director, Deloitte Touche Tohmatsu India Pvt. Ltd.

“Traditionally, IT and ITeS companies in India earn majority of the revenue from outside. Nonetheless, as India embraces these key global trends institutionalized through government’s measures, it is good news for (domestic) IT industry," he said.

According to software lobby body Nasscom, the IT sector’s domestic revenue was pegged at 1.15 trillion in fiscal 2014 and is projected to range between 1.25 trillion and 1.289 trillion in fiscal 2015.

According to R. Chandrashekhar, president of Nasscom, “providing Wi-Fi services, nextgen e-ticketing system, GIS mapping and digitization of records will enable the Indian Railways in its overall growth objectives."

Dinesh Malkani, president-sales, India and Saarc, of Cisco Systems Inc., said the technology-led initiatives announced in the railway budget “are definitely a step in the right direction, both for the citizens and the IT industry".

“We see a huge potential for the IT industry to leverage existing strengths in cloud, mobility and IoT (Internet of Things) solutions to deliver innovative solutions around paperless and digitized offices, technology-based safety solutions as well as truly connected operations".

Sanchit Vir Gogia, chief analyst of Greyhound Research, too, believes the budget is “transformational...especially from the mobility stand point. Mobility is going to drive a lot of consumption and will be needing a lot of investment".

Big Indian software services firms, which consider digital business and mobility to become key revenue growth drivers in the next few years, will be battling for their share in the opportunity.

For instance, TCS expects its digital business to generate $3-5 billion of revenues over the next few years. HCL Technologies Ltd too said its digital system integration (DSI), providing services to companies that are going digital, is the new generation proposition and one of the key growth areas for the company.

“Global enterprises today view digitalization as a route to business model transformation. Indian Railways’ digitalization efforts signify a major shift towards onboarding what HCL calls Gen 2 propositions, which in turn lead to creation of sustainable competitive advantage," said Sanjeev Nikore, president, APMEA (Asia Pacific/Middle East/Africa), India Business and Strategic Engagements, HCL Technologies.

Beryl Menezes in Mumbai contributed to the story.

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