India Inc's IT spend to grow 26% in FY08

India Inc is expected to invest Rs 8,974 crore on information technology (IT), 26 per cent higher than the last year's figure of Rs 7,123.

The annual survey Dataquest-IDC MegaSpender 2007 by Dataquest, and IT research and advisory firm IDC India states that IT investments made by mega-spenders in 2006-07 made up more than one-tenth of the total domestic IT/ITeS industry, which notched up sales of Rs 68,411 crore in 2006.

The survey notes the average IT spend as a proportion of a company's turnover went up by 0.7 per cent during the period compared with 0.6 per cent a year ago.

The use of information technology across all hierarchies of an organisation not only increased but also became more sophisticated in the last one year, according to the observations made by the survey.

About 42 per cent of the total IT spend was on hardware while expenditure on packaged software and services software stood at 26 per cent each. PCs, laptops and servers were responsible for half of hardware expenditure.

On the software front system and application software accounted for more than half of the spend. The survey was based on responses from 226 organisations across 11 verticals.

The average IT investment by an IT mega-spender was Rs 34 crore in 2006-07, and is expected to grow by 26 per cent to Rs 43 crore this financial year.

Public sector units (PSUs) constituted more than half of the top 50 IT-spenders during 2006-07, breaking the myth that modernisation can take place only in private sector companies.

As many as 35 banks, financial institutions and insurance companies, with Rs 2,646 IT investments, were among the top IT buyers. The top 15 IT buyers from the BFSI (banking,financial services and insurance) sector also made it to the top 50 in the survey.

The banking firms that made it to the top 50 IT spenders' list include Bank of Baroda, Bank of India, Canara Bank, Centurion Bank, HDFC Bank, ICICI Bank, IDBI Bank, Indian Overseas Bank, ING Vysya Bank, Karnataka Bank, Punjab National Bank, State Bank of India and Syndicate Bank.

The four insurance firms, LIC, New India, Oriental and United India Insurance, also made it to the list. In 2007-08 also, the BFSI sector is expected to remain the highest spender in information technology, with estimated investment of Rs 3,368 crore, says the survey.

The telecom sector, comprising 8 firms "� Aircel, Bharti, BSNL, Hutch, MTNL, Reliance Communications and VSNL "� invested Rs 2,314 crore on IT during 2006-07, making the highest average IT investment of Rs 289 crore for each company.

IT investment by the sector is projected to increase to Rs 3,031 crore this year. The sunrise IT/ITeS sector, comprising 23 players, including MphasiS, NIIT, TCS and Wipro, invested Rs 652 crore during the last financial year, averaging Rs 34.32 crore each.

While the average IT spend across all the sectors is expected to grow by 26 per cent, the retail sector's IT spends will grow by 41 per cent, utility, telecom and BFSI sectors are expected to grow at 35 per cent, 31 per cent and 27 per cent respectively.