On the urban infrastructure front, the IT majors have been mostly successful in expanding to tier-II and tier-III cities and some formal help from the government is also forthcoming. Somak Roy says, “The government is working on IT Investment Regions (ITIR), which are designated areas aimed at the development of IT software and services, ITES, and electronic hardware manufacturing. The major focus of the ITIR program is to increase the ‘catchment’ area of major cities, where streamlined IT/ITES operations are possible.”
Datamonitor agrees with NASSCOM’s estimate that the domestic opportunity could be US$50 billion by 2020.
According to Datamonitor the domestic market will grow to US$24 billion by 2013, growing at a CAGR of 27% between 2009 and 2013. Datamonitor supports the industry’s self assessment (NASSCOM’s projections) that the domestic opportunity will be US$50 billion by 2020.
Lead analyst with Datamonitor and the report’s co-author, Surya Mukherjee, states that at least three major factors will drive growth: The B2C companies are scaling up and with scale comes the need for formal, tightly defined processes and the technology to support these processes; the e-governance projects in the private sector; and egovernance projects and the broader economic growth story will rope in parts of the population that are yet to receive service from the private sector will come within the organized sector’s horizon, driving the need for IT systems and applications.
However Datamonitor analysts believer that the domestic IT services growth will happen if the following hold true: the current global economic climate does not slide into a prolonged recession; the liberalization drive and the public-private-partnerships proceed at the current pace; the near monopoly of the National Informatics Center (NIC) on government projects is progressively relaxed; and the most ambitious of government sponsored IT projects such as the Unique ID project, which is expected to have a multiplier effect on other e-governance projects, goes mostly according to plan
The public sector has played an important role in absorbing some of the uncertainties and fluctuations induced by the global economic climate. There are 27 ‘mission mode’ government projects in the pipeline, and four in operation. The scale is enormous, and the projects have an estimated outlay of US$5.1 billion over 5 years (announced in 2006). NASSCOM estimates t the IT opportunity from 2010 to 2013 could be US$9 billion.
Roy says, “. Per capita public sector spending on IT is a little more than a dollar, compared to over US$150 for New Zealand and Australia; India was ranked 113th in an e-governance index in 2008. While this could indicate either potential or an insurmountable lack of political will and management ability, we believe that current e-governance projects could have a better success rate.”