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Indian mid-market increase IT spending this year

Viraj Desai

Despite austerity and cost cutting, Indian mid-market businesses will increase investment in IT to improve customer satisfaction and upgrade hardware and software to support business growth.

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According to Forrester Research, over 60% of Indian mid-size will increase IT spending by between 5% to 10% this year.

The Forrester research of 430 businesses with between 400 and 2,500 employees found that businesses are looking to IT to increase competitiveness. This requires investment in customer-facing technologies and the IT infrastructure to enable businesses to grow.

Over three quarters of Indian mid-market businesses (77%) said addressing the rising expectations of customers and improving customer satisfaction was a high or critical priority. This is driving investment in digital technology.

“Our survey signaled a changing attitude among Indian mid-market companies who are increasingly viewing IT as a means to better engage digitally enabled constituents. This is fueling a fundamental shift in the way Indian mid-market firms interact with customers,” said Forrester.

But the back office IT will also need to be updated to cope with increased customers and the business they bring.

Forrester said Indian mid-market businesses will also need to invest in hardware and software to support business growth. “The need to modernize infrastructure and improve business applications to grow business will drive hardware and software spending from Indian mid-market firms.”

Pune-based Persistent Systems specializes in software and technology services and is planning to increase IT spending over the next two years. "We have provided for a significantly higher budget compared to the last year. The increase for the current year is about 50% and next year it would be in the range of 30% - 40%," said Mritunjay Singh, COO at Persistent Systems.

Despite modest forecasts of customer spending, Singh said the company is planning to invest in technology such as cloud computing, enterprise mobility, social, analytics and big data.  “We expect flat to upward spending from clients. But, there is no secular trend and we do see an upside in spending from firms,” said Singh.

This is typical of mid-market firms that are not holding back IT spending due to economic uncertainties, said Apoorva Ruparel, head of the India Business at supplier iGate. He said despite the slowdown and economic turmoil, firms see IT as a way out. 

"Firms will have to innovate in order to grow.”

He added that Indian mid-market businesses are starting to look at IT outsourcing to cut costs and enable expansion.  “While mid-sized firms are looking at shared services, some of them are becoming more mature as they seek transformational business solutions such as managed services," said Ruparel.  

Forrester also reports that consumerization is driving spending in security and analytics as they try to secure activity outside the company firewall at the same time as making use of the customer data being collected there.