Indian government to spend $7.8B on IT: Gartner

Global IT research firm Gartner has published a report “Forecast: Enterprise IT Spending for the Government and Education Markets, Worldwide, 2014-2020, 4Q16 Update,” that states that the government of India is expected to spend $7.8 billion on IT in 2017, an increase of 9.5% as compared to 2016. The report also revealed that the IT spending by Banking, Finance and Securities Industry (BFSI) is expected to reach $8.9 billion this year, an increase of 9.7% as compared to last year. According to the report, while all three levels of the government – center, state and local – will be investing in internal services, software IT services, datacenter systems, devices and telecom services. The BFSI spends will comprise of enterprise IT for internal spending and spending data on data center systems, devices, software, IT services and telecom services.

Government going services way?

Gartner states that the software segment includes enterprise resource planning (ERP), supply chain management (SCM), customer resource management (CRM), desktop, infrastructure, vertical specific software and other application tools for the government IT.

“Government spending on IT services will total $2,093 million in 2017, a 15% increase from 2016. The IT services market is led by growth in business process outsourcing,” said Moutusi Sau, Principal Research Analyst, Gartner.

Double digits for BFSI IT

The report claims that as the BFSI invests more in business processes, IT services will grow the fastest at 13.8%, specifically in business process outsourcing. The focus is on outsourcing the activities to achieve operational efficiency and reduce costs in the banking and securities industry in India.

“The banking and securities industry in India saw a sea of change from earlier years in 2016 due to the sudden demonetization announcement. Banks are increasingly working to enhance their customer facing platforms and investing in payment tools,” added Sau.

Devices and services to see growth too

The Gartner report also furnished that devices spending in the country will grow 12.7% in 2017 to reach $917 million (printers, copiers, MFPs, mobile devices, PCs and tablets). The software segment is projected to grow by 15.7% to reach $1 billion and desktops will be the fastest growing segment with 16% growth in this category, in 2017. A 14.6% growth is projected for the IT services industry including consulting, software support, business process outsourcing, IT outsourcing, implementation, and hardware support. The investment in this sector is expected to reach $2 billion, making it the largest segment within the IT spending category.

Supporting IT Startups

Apart from investment in IT, a news report in Hindu stated that the government is also planning invest INR 2200 crore ($328 million approx.) in startups working on novel technologies for the electronic, nano-electronic and IT sectors, in the next three years. The investment will be under the Electronics Development Fund run by the Ministry of Electronics and Information Technology, and will put in 10% of the capital in ‘daughter funds’ and the rest would be invested by venture capitalists amounting to a total of INR 22,000 crore ($3.2 billion).