Market Monitor - ICT Industry - India

マーケットモニター

  • インド
  • エレクトロニクス・ICT

2015/05/21

Robust growth is expected to continue over the medium term, with compound annual growth rate forecast at 11.6 % for 2015-2019.

Market performance snapshots

India

  • Export growth of IT services outsourcing
  • Some major growth constraints remain
  • More cautious underwriting on IT resellers remains

BMI Research forecasts another strong year of ICT spending growth in India in 2015, underpinned by robust economic growth (forecast 6.7% in 2015) and an increasingly supportive policy environment. According to BMI, total ICT spending will increase 11.6% in local currency terms in 2015 to reach a total value of INR 2.45 trillion. Robust growth is expected to continue over the medium term, with compound annual growth rate (CAGR) forecast at 11.6% for 2015-2019, and market value expected to reach more than INR 3.8 trillion in 2019.

While the main growth driver in 2015 will be notebooks, tablet sales are also expected to witness growth after a contraction last year. Enterprise and public service modernisation will offer vendors considerable opportunities, with cloud computing and small- and medium-sized enterprise (SME) solutions and services expected to be areas of strong performance. However, constraints to growth will be increasing global competition, persistently high software piracy rates and potential currency volatility. In Q1 of 2015 IT services exports to non-US markets, including Europe, have been severely hit by dollar gains against other major currencies.

The National Association of Software and Service Companies (NASSCOM) indicated that India’s IT services outsourcing sector is expected to register an export revenue growth rate of 12%-14% in the financial year 2015-2016 (which in India starts April 1st and ends March 31st). Future growth in the sector will be fuelled by growing demand in global corporations for new services such as digital technology, mobile applications and cloud computing. The cloud computing market in India is still at a nascent stage, but developing rapidly. Global vendors such as Cisco, Microsoft, Amazon and IBM are triggering growth in the market. There is also a strong government push driving awareness and adoption of cloud services. More local end users are moving towards cloud computing as new offerings are being placed in the market.

There is also an increasing number of start-ups in the Indian IT market. According to a report by NASSCOM and Zinnov (January 2015), India has emerged as the fourth largest base for start-ups globally. The rise is attributed to unique solutions being offered by Indian start-ups in global whitespace opportunities like the Internet of Things, augmented reality, smart hardware, business intelligence and many more.

National IT distributors or large software/hardware companies are either publicly listed or privately owned by strong groups. Issues with liquidity and solvency typically arise with IT reseller businesses. In this segment in particular we continue to maintain a prudent approach. IT hardware resellers are mostly partnership/ proprietorship companies working on very low margins, impacted by multiple sourcing, tougher competition and price volatility due to currency fluctuation. While financial information is readily available for incorporated companies, difficulties arise in the case of partnership/proprietorship firms that are not obliged to file their annual accounts with the Registrar of Companies (ROC), and which are usually unwilling to share that information with third party information agencies. In such instances, apart from taking into consideration qualitative factors, we ask for our customers’ assistance in obtaining up-to-date financial documents on their buyers, along with detailed trading history.

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