Monday, September 15, 2008

Asia Pacific's fastest growing domestic IT services market is India

While the IT service markets in US and Europe are slowing down in the face of a relentless onslaught by rising oil prices, the sub prime mortgage crisis and the toll of the war against terror, the opposite seems to be the case in Asia Pacific. And it comes as no surprise that the fastest growing IT services market in APAC is India.

IT end-user spending in India is expected to grow at a compounded annual growth rate (CAGR) of 14.8 percent from 2007 through 2012 to touch $110 billion (Rs 484,000 crore) by 2012, says research and advisory firm Gartner.
In the current year, IT end-user spending is on way to reach $64.7 billion (Rs 2,98,345 crore), a 17.2 percent increase from 2007.
This surprised me a tad bit since traditionally growth in Asian markets has been fueled by US-EU markets. Things have changed a lot since the last 2 decades when India specifically opened the doors of her economy to world market and took a giant leap in getting integrated closely with the world growth engine.
1. The bustling Indian GDP that is growing at 8%. The enormous demand created by a burgeoning middle class means that Indian businesses will continue to invest in IT in order to drive operational excellence and innovation. Small and midsize businesses (SMBs) in turn will drive the growth of various IT-related industries, with the critical involvement of value added resellers, distributors and retailers.
2. Inward focus by Indian IT vendors towards servicing the domestic market due to slowdown in traditional hunting grounds like US-EU-Australia. TCS is the largest domestic market caterer and Infosys has spelt out clearly that its strategy is to have more focused approach in going after public deals. "We will be participating in the bid for BSNL, Indian Railways and for the e-commerce platform of the Ministry of Commerce", states Binod H R, Senior Vice President, Indian Business Unit, Infosys
3. Best of breed practices that have been picked up by Indian IT vendors while servicing international clients is being utilized to serve the demanding Indian client better. Availability of talent to provide IT services in the business language of the world adds on here.
These three points have rolled out a positive spiral in place with supply and demand chasing each other to create the fastest growing IT services market in Asia Pacific.

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