Look how Indian IT is fattening

The global slowdown might be hurting the growth of Indian IT industry, however, the domestic IT market seems to be gradually gearing up to make up for the fall in export revenues.

According to IT research firm Gartner, IT end-user spending in India is expected to grow at a compound annual growth rate (CAGR) of 14.8 per cent from 2007 through 2012 to generate US $110 billion in 2012. In 2008, IT end-user spending is on pace to reach US $64.7 billion, a 17.2 per cent increase from 2007. This prediction, supplemented by a robust gross domestic product (GDP) averaging 8.08 per cent growth from 2007 through 2012, means the Indian market continues to represent a significant growth opportunity for IT vendors.

"Indian businesses continue to invest in IT in order to drive operational excellence and innovation," said Naveen Mishra, senior research analyst at Gartner.

Interestingly, the figure is way off the mark from Nasscom estimates, according to which the overall domestic market, comprising hardware, software and services (IT-BPO), grew an impressive 42 per cent in FY2007, and is forecast to reach $23.2 billion in the current fiscal, according to Nasscom.

Here's looking into Gartner's estimate of the Indian IT market.
By 2012, Gartner predicts that the Indian market will ship nearly 24 million PCs, of which more than 50 per cent will be mobile PCs. By 2012, the Indian market will ship more mobile than desk-based PCs.

While desk-based PCs are expected to represent 46.1 percent of the total market, the rest will be mobile PCs. However, Gartner expects that the rapid growth of mobile PCs will outstrip the share of desk-based PCs in the home segment.

By 2010, mobile PCs will contribute 51.8 per cent of total shipments and will rise to 61.4 per cent by 2012. PC penetration is increasing in India's smaller cities, and these cities will continue to drive growth, especially for desktops. Small business and consumer segments will lead this march in smaller cities. The demand for nearly 35 per cent of all PCs sold today are from the top 20 to 100 cities.
The Indian server revenue market is poised for 6.3 per cent CAGR from 2007 through 2012. This growth will be primarily fuelled by the growth in the x86 and the Itanium platform. Unit shipment growth will experience a 10.2 per cent CAGR for the same period.

Non-x86 based platforms will continue to dominate the high-end and midrange server segments, especially in large enterprises such as the banking, telecommunications and government sectors. Feature-rich processors in x86 servers will account for the majority of server spending, followed by RISC/Itanium-based servers.
The total software market in India will reach $3.4 billion by 2012. India is one of the fastest-growing software markets, and it is expected to register the third highest CAGR of 16.3 per cent for the forecast period of 2007 through 2012. Software spending and plans for critical IT initiatives to attain business agility will remain unaltered.

Demand from vertical markets, which see IT as a core business enabler such as banking, finance and insurance will drive the software market in India. Increases in mergers, acquisitions and alliances in the local market by Indian enterprises will increase spending on software segments for applications and process integration.
India's domestic IT services market is the fastest-growing market in Asia/Pacific with a CAGR of 20.2 per cent from 2007 through 2012, reaching $11.8 billion in 2012. The Indian IT services market is fragmented, and competition will intensify with new players entering into the market, forcing providers to find their market niche and differentiation to win deals. Top technology priorities include security, business intelligence and enterprise application projects.

By 2012, the telecommunications services market in India is expected to reach $52 billion growing at a CAGR of 26.8 per cent from 2007 through 2012. India will remain a wireless and voice-dominated market until at least 2011, and wireline technology will take a back seat. Broadband penetration will reach above 7 per cent by 2012, and Broadband Wireless Access based solutions will be the growth drivers.