Results point to a two-speed India, where one group is investing in IT for the first time, and the other in upgradation.

Moumita Bakshi Chatterjee

New Delhi, Aug. 31

IN a clear indication that companies in India are setting the investment pace to support aggressive hiring and spending, a whopping 67 per cent of firms surveyed by Forrester are seen to be increasing their IT budgets compared to 2004, while only eight per cent have decreased the budget.

"Indian firms have seen phenomenal budget increases over 2004 and are way ahead of their North American, European, and Asia-Pacific counterparts. As much as 67 per cent of respondents have seen increases, while only eight per cent decreased budgets," a latest Forrester report titled `India Midyear IT Spending Outlook' has said.

ASEAN countries reported a net 35 per cent of firms increasing budget and Japan a net 22 per cent.

In June and July this year, Forrester surveyed 700 Asia-Pacific businesses and government agencies on their IT budgets and expenditures. Of them, 60 were from India, and 38 per cent of respondents represented the senior-most IT decision-maker at their company or government agency.

The study found that in the case of India a vast majority of spending was going towards new initiatives and investments. "In general, results point to a two-speed India, where one group is investing in IT for the first time, and the other is upgrading existing infrastructure and replacing outdated systems," Forrester said.

While IT budgets were up, IT staffing was also seen to be increasing. "Indian firms find themselves well ahead of North American firms, European firms, and Asia-Pacific Centre firms when it comes to IT staff hiring. The majority of respondents (63 per cent) are holding IT staff flat, and this is in step with other nations. However, 38 per cent are increasing their IT staff, while not a single respondent reported downsizing," it said.

The report pointed out that Indian organisations expected to make investments in security, integration, and servers in the coming year. The survey found that in the next 12 months, 74 per cent of respondents would be increasing spending on applications and labour to integrate systems and data. ERP package software implementation is expected to see the next highest spending increase, with 64 per cent of firms likely to increase spend.

(This article was published in the Business Line print edition dated September 1, 2005)
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