Hardware to outgrow telecom; service, software sectors to grow fastest till 2014: Gartner

Information and communication technology (ICT) spending in India is forecast to reach $71. 9 billion in 2011, a 10.3 per cent increase from the $65.23 billion spent in 2010.

According to technology market researcher Gartner, Inc, hardware will be the fastest growing segment with a compound annual growth rate growth of 20.4 per cent through 2014, while IT services showed the strongest annual revenue growth at 22 per cent in 2010.

On the other hand, the telecom segment, that is forecast to account for 73 per cent of the Indian ICT market in 2010, is witnessing a slowdown and is set to grow at 13.2 per cent growth (see table).

Gartner said that double-digit growth across all sub segments of ICT will drive the growth this year.

Peter Sondergaard, senior vice president and global head of research at Gartner, provided the latest outlook for the IT industry yesterday to an audience of more than 300 IT leaders at Gartner India CIO & IT Executive Summit.

''IT spending in India saw somewhat of a slowdown as a result of the global economic recession through much of 2009," said Sondergaard. "The overriding major theme across companies in India last year was better utilisation of existing resources and driving efficiencies of infrastructure.

HE said while many companies adopted a cautionary approach in 2009, a strong return to growth had been seen in 2010, due in part to pent-up demand following budget slowdown in 2009, the need to replace or add hardware and the massive consumer segment driven growth across many industries.

Sondergaard added, ''A large young working population, a rapidly rising middle class and emerging opportunities in the services sector are going to be the key factors in the growth of the consumer market in India. Growth within smaller towns and cities will provide the next level of opportunity for IT vendors across categories.''

In hardware, much of the growth will be driven by spending within the client computing space. Increasing rural prosperity, aided by growth in the small office and the small business segment, are the key growth drivers in the PC segment.

''The IT services space in India will be driven by new projects in areas of business applications (CRM, ERP, BI), virtualization and data center consolidation and green IT exploration,'' said Partha Iyengar, vice president and distinguished analyst at Gartner and head of research in India. ''Government and defense segments will create sizeable opportunities in large systems integration projects for application services. Managed services around IT infrastructure will open up doors to application services.''

The software segment in India is expected to grow with strong traction being recorded in business intelligence, middleware, database management systems (DBMS) and application development (AD) tools. The India market is in a growth stage and is the fourth largest software market in Asia-Pacific after China, Australia and South Korea. There are sizeable opportunities within manufacturing, retail, transport and hospitality, as well as the already established opportunities in government, telco, financial sectors and IT services.

''India continues to be a vastly underpenetrated IT market relative to its potential. Infrastructure projects undertaken by India's government will strongly drive IT, in conjunction with the growth of the hypercompetitive financial services in India, which requires highly sophisticated IT systems, '' said Mr. Iyengar ''At the same time, manufacturing in India is beginning to take off, and is expected to show strong growth through 2014. ''