Computer Systems Integration

An Expert's View about Computers in India

Last updated: 25 Aug 2011

Summary

The Indian Information Technology-Information Technology Enabling Services (IT-ITES) sector has been growing at a remarkable double-digit growth rate in preceding years and attained USD 71.1 billion in revenues in FY 2009 –10 (Apr 09 – Mar 10), an increase of 16.9 per cent. Exports of IT-ITES services accounted for nearly two-thirds of the total, and it is estimated to grow by 18-19 per cent annually. According to National Association of Software Services Companies (NASSCOM) – the premier association representing the IT sector - the Indian IT Services and Software sector grew from USD 16.5 billion in FY 2004-05 to USD 71.1 billion in FY 2010-11. The Indian Software exports grew from USD 12.2 billion from 2004-05 to USD 56 billion in the year 2010-11; whereas the domestic demand for IT services grew from USD 2.3 billion from 2004-05 to USD 5.4 billion in 2009-10, an increase of 21.6% over the previous year.

Engineering and R&D services and software integration are two major segments that hold significant opportunity for both the U.S. and Indian IT & ITES players, as this particular sector is expected to grow at a CAGR of 18 percent over the next three years. Further the development of common enterprise management applications and technology platforms will drive information integration across the value stream facilitating more efficient planning, deployment and management of capital assets and production. Out of the present domestic demand of USD 5.4 billion, more than 60% of the requirements of the software engineering and integration services are being provided by American multinationals that are either operating from India or providing technical expertise directly from the United States of America.

Some of the prominent U.S. companies who are currently operating in India are: IBM, Hewlett-Packard, PeopleSoft, EDS, Unisys, etc. Some of the software integration services provided by the above companies include: construction, heavy engineering, electronics, communication, automotive, aerospace, industrial systems, medical systems, agricultural equipments, industrial equipments etc.

The computer software integration services (these include network services, project management services, engineering and design and GIS) revenues grew from USD 2.10 billion in 2009 to USD 2.8 billion in 2011 (March.)

Market Demand

The liberalization of Indian economic policy, de-regulation of key sectors and progressive moves towards further integrating India with the global economy has been a key driver of increased IT adoption in the country. This is best reflected in the fact that most indigenous players in telecom and banking, two key sectors with significant multinational corporation (MNC) participation, have significantly upgraded their levels of IT adoption to offer best-in-class services comparable to those offered by the global competition and these two sectors together account for approximately 35-40 percent of the domestic spend on IT services.

Similar competitive pressures in other more recently deregulated service sectors such as airlines and insurance, and the uptake in the manufacturing and industrial sectors; and the several large e-governance initiatives launched by the government under the National E-Governance Plan (NEGP) are expected to provide sustained growth in domestic demand for IT services over the next few years. Over the next five years, domestic spending on outsourced IT services is projected to more than trebled, from USD 2.1 billion in 2009 to over USD 7.2 billion by 2015.

According to NASSCOM, systems integration and network integration make up a high growth-large size category within the IT services engagements. These services will continue to be prime drivers of the domestic IT services market in the enterprise segment due to the increasing growth in the enterprise application implementation and increased demand for network integration from telecom & banking verticals. According to NASSCOM the market computer software integration services (these include network services, project management services, engineering and design and GIS) grew from USD 2.10 billion in 2009 to USD 2.8 billion by 2011 (March), and is expected to see revenues of more than USD 6 billion by the year 2015.

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Posted: 24 August 2011, last updated 25 August 2011

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