Indian ICT market to be the fastest growing globally

Global research and advisory firm Gartner on Monday predicted that Indian ICT (information and communication technologies) market will surpass China to emerge as the fastest market globally in 2003.

While China will remain number one in overall market size, the Indian domestic market is expected to grow by 25-30 per cent and would be the fastest growing ICT market in the world, Gartner's forecast for 2003 said.

China should be viewed as market, not competitor

Gartner is of the opinion that China is more significant to India as a large market than as a competitor for IT services, a Gartner release said.

Evaluating the Indian ICT market, Gartner pointed out to valuable and positive indicators of a strong projected growth.

These included a ramp-up in spending by the BFSI sector, signs that ERP has come out of the "trough of disillusionment", moving up to the "plateau of productivity" on Gartner's "Hype Cycle", and increased organisational and government spending.

The predictions revealed that Asia Pacific (excluding Japan) will lead the global IT recovery with sales of IT and communication products and services almost doubling from 5.8 per cent in 2002 to a 10 per cent growth rate this year.

Gartner also expects local IT suppliers from within the Asia Pacific region to gain market share at the expense of existing IT multinational companies.

"This includes the Tier One Indian service providers such as Infosys, TCS and Wipro; emerging Chinese hardware manufacturers including Legend, Huawei and ZTE and niche software companies from across the region," it said.

Gartner said wireless would be a key driver of continued growth in Indian telecom market, though rationalisation of licensing regulations and interconnectivity policies would be a strong factor affecting growth in the longer term.

Combined PC desktop and notebook shipments in Asia Pacific would grow 11 per cent to 23.4 million units this year compared with 21.2 million units in 2002.

"Hardware unit growth in India will reach 10 per cent, making the country one of the fastest growing hardware markets --in unit terms--worldwide," the firm predicted.

It said Linux would not pose a significant threat to Microsoft or even Unix in the near to medium-term in the Indian market.

"This is in spite of the increased visibility of Linux in the region, especially against the backdrop of strong 'defensive' investments by Microsoft in India," Gartner said.

India will be the undisputed leader in BPO

Commenting on the much-hyped business process outsourcing sector, Gartner said 2003 would be the year for consolidation of the BPO industry in India.

"The future looks promising as the BPO industry is set to grow but the business case would be approached with a clear long-term perspective," it said.

Gartner sees the sustained economic slowdown continuing to work in India's favour, making it hard for US enterprises to ignore the "huge cost arbitrage" India and the region offers in the contact centre and back office processes.

It, however, cautioned that Indian vendors who do not have “referenciable” clients or presence in the US/UK would find it difficult to convince enterprises to sign, especially in the emerging bank office opportunities.

Overall, India will remain the undisputed leader as an "offshore BPO destination". "The industry size will grow and investments in captive units of large MNCs will continue to be the key driver in the industry," Gartner said.

Having said that Asia will lead the global IT recovery, Gartner was quick to caution that users and vendors alike must wait until 2004 for a more pronounced global IT recovery.

One mitigating factor could be an Iraq war

In the current scenario, one mitigating factor could be a war in Iraq. "If it happens, consumer confidence in the US will plummet and oil prices will rise. The tenuous global economic situation will worsen, prolonging any hope of short-term IT investment recovery for the region."

Gartner also warned that people should prepare for disillusionment with the Chinese market as enterprises experiment and fail.

Hype about China not realistic

Gartner's believes China is a long-term play, where much of the hype is not realistic in the short-term. For many foreign enterprises entering China for the first time and expecting quick returns, there will be disappointment.

While China is a significant market and companies that penetrate it properly will prosper, it is not as simple as opening a branch office in Shanghai and waiting for orders to roll in, it said.

Success in China, Gartner said, will require an understanding of both the market and cultural issues, which few enterprises possess.