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It was a year of comebacks in the technology space. Narayana Murthy came back to save a tottering Infosys, telecom companies were back with positive revenue growth and IT stocks were once again fuelling up the indices.
In the telecom sector, for instance, the industry average revenue per user (ARPU) moved up from Rs 135 in 2012 a month to Rs 154 in 2013, the average minutes of usage increased from 329 to 372 and active 3G subscriber base nearly doubled from 16 million to 29 million.
All this coming on the back of a flat 2012 indicates that the 2014 would usher in growth for telecom companies.
Key catalysts Sandeep Girotra, Head of India region, Nokia Solutions and Networks, said, “2012 to 2013 has seen mobile data traffic almost doubling in India. The key catalysts to continue this mobile broadband momentum in India will be better use and availability of spectrum, wider 3G coverage and operators focusing on network modernisation.”
The optimism is being driven by expectations of growth in data consumption due to increasing proliferation of affordable smartphones, tablets and other connected devices.
“With pricing power gradually coming back to the telecom sector, leading to increased confidence, it is bound to drive the second phase of telecom growth and investment in 2014,” said Syed Safawi, Chief Executive Officer of Viom Networks.
For consumers, 2014 could be a year of rising tariffs. Due to high spectrum prices and investments for expanding 3G and 4G networks, data and voice tariffs are expected to increase in the coming year, according to Hemant Joshi, Partner, Deloitte Haskins & Sells.
IT sector In the IT sector, all indications are that the 2014 would usher in broad-based growth for the country’s $108-billion software services fraternity. The pronounced recovery in demand from the US and Europe, coupled with the mainstream adoption of newer IT models may propel home-bred vendors into higher growth orbits in 2014.
“We are ending the year on a positive note. I expect 2014 to be a phenomenal year for the Indian IT industry, given the signs of economic growth and the strength in our business model,” said Ganesh Natarajan, Vice-Chairman and CEO of Zensar Technologies.
Three factors According to Peter Schumacher, Chief Executive Officer of consultancy firm Value Leadership Group, three central issues are driving demand for IT services in Europe. First, many large companies need to lower costs, adjust their operating models to new competitive realities and hedge their talent risks. Second, significant latent demand exists as the adoption of a global development model for IT is low and finally, the prolonged economic crisis has significantly hurt the competitiveness of European IT services competitors. However, there continues to be a strong policy overhang for both telecom and IT sectors. For example, the US Immigration Bill could fundamentally alter the way companies do business in their largest market, if the Bill is passed in its current form.
Similarly, in the telecom space, there is considerable uncertainty over issues, such as spectrum trading. Resolution of these issues is necessary for the once poster boys of Indian reform, IT and telecom, to regain their old glory.
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