India has emerged as the fastest growing IT market in the world. Aptly supported by the rapid technology adoption by the domestic market, along with an impressive showing at the export front, the Indian IT market is all set to reach new heights. The role of IT is defined in most organizations today as that of a business partner. There is complete awareness at the top about the potential of IT to facilitate the fulfillment of business objectives.

This is the most opportune time for IT to grow by aligning with the business. Most technology investments that are made by businesses today, whether in storage infrastructure, enterprise applications, or shop-floor automation, are made keeping business necessities in mind. As a result, it is important to align IT to business as IT implementations without business imperatives attached to them are nothing but wasted efforts. The role of technology is to help streamline business activity, make it more cost-efficient, reduce wastage, and optimize resources.

The top five business priorities for which IT is looked at are: improving business processes, controlling costs, maintaining customer relationships, improving competitiveness, and regulatory compliance.

The growth in the domestic IT market is led by an impressive growth in the packaged software and services market, followed by sustained good performance by the hardware market. A key demand driver for the Indian IT market has been the changing business landscape, which has exerted tremendous pressure on Indian companies. In large measures, this change in the business environment has pushed Indian incorporations to adopt better, efficient, and faster IT infrastructure and applications. Apart from this, the rising affluent middle class and its appetite for modern goods and better services have also created immense opportunities for Indian incorporations. This has also contributed in large measure to the increased IT spending by all sectors of the Indian economy and is expected to continue to do so over the next five years.

The Indian domestic IT industry continues to be the highest growing market in the Asia-Pacific region. The size of the domestic IT market was Rs 61,760 crore in 2006 and is expected to touch Rs 132,132 crore in 2011. The CAGR for the period 2006-11 is expected to be 16.4%. The IT market is expected to more than double in the next five years with the industry crossing the Rs 100,000 crore mark in 2009.

Changing Demands
The Indian economy consists of a number of industry verticals and all of them have their own set of dynamics and challenges. Correspondingly, their IT requirements are also different. A marketer needs to know the important trends typical to each industry vertical in order to formulate an effective marketing strategy. Thus, IDC India came up with the vertical-specific reports covering ten major verticals in India where it has analyzed the overall industry sizes, general trends/drivers, challenges/issues, and regulatory observations for all verticals. These reports also mapped the verticals IT spending patterns for 2006 (with forecast up to 2011) and IT priorities in terms of technologies and solutions required by them.

Leaders for Now, But
BFSI and manufacturing continue to be the two biggest spending verticals, cornering more than 33% of the total domestic IT industry in 2006. But, their combined share is expected to come down to around 30% by 2011. This is because other verticals, like telecom and government and education are fast catching up with these verticals and are expected to contribute around 23% of the total IT market in the next five years. The sunrise verticals of the Indian economy (retail, IT/ITeS, utility, and healthcare) are going to increase much faster than the other matured verticals (BFSI and manufacturing) and are expected to contribute significantly to the IT market by 2011. Thus, in terms of the emergence of new growth catalysts for the domestic IT market, the focus verticals are going to be government and education, retail and wholesale, utilities and healthcare.

Government and Education
The last couple of years have seen e-Governance making great inroads in India. IT enables far better and efficient delivery of government services as it caters to a large base of people across different segments and geographical locations. The governments in India are working aggressively for bringing efficiency in government functioning, improving productivity, process standardization, automation, streamlining service delivery across government departments, and e-enabling the interface between governments and citizens and enterprises.

Opportunities: The effective use of IT services in government administration is greatly enhancing existing efficiencies, driving down communication costs, and increasing transparency in the functioning of various departments and governments in India. It is also giving citizens an easy access to tangible benefits, be it through simple applications such as online form filling, bill sourcing and payments, or complex applications like distance education and telemedicine. Almost every state in India has an IT policy in place with the aim of evolving itself from being an IT-aware to an IT-enabled government. The governments in India have embarked on the e-Governance initiatives in a big way and are keenly focused on some of the more immediate need based projects like statewide area networks, state data center, establishment of community information centers, e-procurement, capacity building, computerization of land records, computerization of regional transport offices, agriculture portals, among others.

Challenges: The processes in the governments are still following the legacy, paper-driven and manual intervention systems. This has to some extent checked the all-round growth and balanced development of the country from a holistic perspective. Administrative reforms have thus become urgently necessary, coupled with the IT business development. The major challenges facing the governments are: change management, lack of infrastructure, under-utilization of the budget, resistance from employees, and the challenge of automating the age-old traditional processes. The main reasons for these challenges being the perceived techno-resistance of employees, lack of basic IT infrastructure in rural and semi-urban areas, and the non-compatibility of the government processes with the latest ICT tools and techniques. Thus, it is necessary for the governments to change the age-old tedious and time-consuming activities to easy, simple, and relatively quick transactions and ensure quick and efficient build up of IT infrastructure in the country, along with providing training to the government employees.

IT Prospects: The IT spend in the segment is going to be driven by the hardware requirements of the governments. Not only will the basic IT hardware like PCs, servers, and printers will find increased acceptance in the segment, so will networking equipments as well considering the projects of statewide area networks, e-procurement, and community information centers. Also, to support the front-end efforts of e-Governance, the ministries and departments look to scale up their back-end IT infrastructure and their internal computerization and networking. This is going to add another impetus to the IT spend in the segment especially the hardware and networking equipments.

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