Financial Daily from THE HINDU group of publications
Thursday, Jul 22, 2004
Info-Tech - Outlook
Tech execs in India, China see higher IT spending: McKinsey
New Delhi , July 21
REFLECTING greater optimism than their global counterparts, an overwhelming majority of technology executives in India and China expect their companies to increase IT spending over the next six months, according to a survey conducted by McKinsey &Co.
"Tech executives in India and China are more optimistic than those in other parts of the world: 86 per cent of the Indian and 75 per cent of the Chinese Chief Information Officers (CIOs) and Chief Technology Officers (CTOs) say that their companies plan to increase IT spending," the McKinsey Global Survey of business executives said.
While 86 per cent Indian respondents of the survey saw their company's IT spend rising, just eight per cent expected it to increase between 26 and 50 per cent. In contrast, a third of the Chinese CIOs and CTOs reported that it would rise by over 26 per cent.
"But technology executives in the world as a whole are more downbeat about the economy's prospects than other top managers are: just 47 per cent of the CIOs and CTOs in the survey thought that economic conditions in their countries had improved during the past six months, compared with 58 per cent of the other executives. The divergent views of these two groups may play out most critically in the way they perceive the next round of technology purchases," the report noted.
In Asia Pacific region Australia, Hong Kong, Japan, New Zealand, Singapore, South Korea and Taiwan as many as 59 per cent of CIO/CTO respondents expected an increase in IT spend, though only 6 per cent expected this increase to be significant.
The survey revealed that 57 per cent of the respondents in North America including US, Canada and Bermuda, and 47 per cent CIOs/CTOs in developing markets (excluding India and China) expected an increase in IT expenditure. CIOs and CTOs in Europe seemed to take a more conservative view with regard to IT spend off-take in the coming months with only 34 per cent expecting an increase.
"Do CIOs and CTOs know something about their budgets that other top executives don't, or are they just more optimistic? Half of them expect spending on IT to increase over the next six months, while only 39 per cent of other senior executives think that might happen," it said.
Among all executives who expect their companies to spend more on IT, nearly a third predict an increase of more than 10 per cent; hardly any executives expect IT spending to fall, it added.
Surprisingly, few executives think that sales or purchasing are the corporate functions that depend most on IT; more list production, financial reporting, order fulfilment, or customer service. Some 18 per cent of non-technical executives thought that financial reporting and control are the systems most reliant on IT, but only 11 per cent of CIOs and CTOs do, it noted.
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