India IT market to touch Rs 1,10,000 crore in 2008

DQC News Bureau

New Delhi: IT research firm IDC (India) has predicted that the domestic IT/ITeS
market revenue will touch Rs. 1,10,000 crore in 2008 while sustaining the growth
of 27 percent recorded in 2007. This would result into the market growing at 24
percent in 2008 over 2007.

The year 2008 is set to mark the beginning of Growth Phase 2.0 to be
characterized by opportunities arising out of the leveraging of the IT
infrastructure built up so far.

IDC India revealed this as part of its annual predictions for the domestic IT
market for 2008. "By posting a substantial jump in the domestic IT/ITeS
market since 2002, the industry is now onto a new growth trajectory. IDC India
expects a significant transition in the Indian IT market as part of the Growth
Phase 2.0," said Kapil Dev Singh, country manager, IDC India.

"Growth Phase 2.0 will leverage the IT infrastructure and technical
capability built up so far to offer new-age services to the Indian enterprises
and consumers," he added.

Growth Phase 2.0

The India domestic IT market will transform significantly with the existing IT
infrastructure evolving both in technology terms and depth of penetration.
Higher demand for sophisticated enterprise and consumer services will drive this
trend as the India domestic IT market 'comes of age'.

Not only are key market segments growing at a healthy pace, the evolution of the
market is visible in the scale and scope of enterprise IT infrastructure
deployment across all verticals as well as emerging verticals, including the
government.

The consumer IT sector maturity is driven by the launch of new consumer
Internet, telecommunication services (Fixed-Mobile Convergence, tele-presence,
Web 2.0 and social networking sites, online and mobile gaming, music and video
downloads), as well as healthy growth in shipments of mobile handsets, consumer
notebook PCs and accessories. The growth in IT retailing also underscores the
'arrival' of the consumer IT phenomenon in India.

Even as vendors reach out to new geographies (beyond BRIC) for growth, India
would continue to remain the centre of attraction. IDC India expects India
revenues to grow the fastest during 2006-2011 amongst all BRIC nations even if
the focus moves beyond the BRIC countries. India, currently contributes to about
one fifth of the total BRIC revenues.

Virtualization will become mainstream in 2008 as it gains wide-scale adoption.
Enterprises across segments like IT/ITeS in India have been early adopters of
consolidation and virtualization. IDC India estimates the share of virtualized
servers to double from the present 22 per cent to 45 per cent by 2008-end.

Riding on the success of server virtualization, storage virtualization is also
coming of age in India. The success stories of virtualization that have gained
momentum are expected to have a positive impact on other segments like
Manufacturing, BFSI and Aviation during 2008.

IDC said uptime, availability and performance management of infrastructure and
applications to be at the core of innovation. Delivery mechanisms will witness
significant change with both Tier I and Tier II managed services providers
setting up more Network Operation Centers (NOCs) and Security Operation Centers
(SOCs) to adhere to stringent QoS (Quality of Service) and SLAs (Service Level
Agreements) with initial response times being as low as five minutes in case of
a mission critical environment.

Managed services providers will drive the next level of innovation by providing
services delivery based on ITSM (IT Services Management) and ITIL (IT
Infrastructure Library) frameworks. These frameworks, coupled with the reduction
of onsite staff will help to cut costs and lead to optimization of uptime,
availability and performance of enterprise IT infrastructure and applications.

Indian customers have already started living the digital experience. The New
Year will take this experience to the next level. In all markets customers are
being offered a variety of choices not seen before in the country.

Convergence is playing an important role in bringing different media together to
offer multiple services to customers over the same platform. The Indian
telecommunication products market can also be categorized into distinct and
rapidly evolving segments.

IDC said fixed-line broadband would emerge as a favored choice in 2008, though
mobile Internet will continue to grow as an alternative Internet access medium.

In the first half of 2008, all major operators will be offering broadband up to
8 Mbps to consumers in metros and some other key cities. Bandwidth-hungry
applications like IPTV, Online Gaming and VoIP will ensure a healthy uptake of
VHSB in 2008 and beyond.

Fixed Mobile Convergence (FMC) will signal the onset of a new battle in the
Indian telecom sector. Integrated service providers will gain edge; the stage
will also be set for a significant onset of Unified Communications (UC)
services.

IDC said that the Web 2.0 market in India to take off in 2008. This will lead to
increased user awareness and participation, something that will

benefit and accelerate the overall Web 2.0 market in India. While smaller
players will feel the pressure with big players foray into India market, the
overall market will benefit from an increased user awareness and participation.

Heightened business risk perceptions and security concerns will drive increased
investments into a range of enterprise-wide and client-centric devices and
applications. Increasing competition and changing business needs are forcing
enterprises to continuously evolve new business models.

IT Solutions delivery will witness change in 2008 with pockets of success and
growing awareness setting the stage for wider market adoption. Fast-maturing
Small and Medium Business (SMB) segment will be a key driver. IDC added that
2008 would witness a major expansion of Software-as-a-Service (SaaS) as a way to
accelerate SMB penetration and Service Oriented Architecture (SOA) adoption.

IDC predicted that in 2008, worldwide IT market growth will be lower, at a
moderate 5.5-6 per cent worldwide, down from 2007's 6.9 per cent. According to
IDC's Global Research Operation (GRO) team, the earliest impact from economic
downturns is felt, historically, in the hardware sector, with software impact
lagging by one or two quarters and services impact more gradual.