"Effective IT adoption key to GDP growth"

Last Updated: Mon, Mar 18, 2013 19:41 hrs

New Delhi, Mar 18 (IBNS) Effective IT adoption will be a key to realizing India's GDP growth potential, said a CII-BCG report.

A report on IT enablement of Indian business, titled "IT for India - New Horizons, New Opportunities" by Confederation of Indian Industry (CII) and The Boston Consulting Group (BCG) was on Monday released by Communications and Information Technology Minister Kapil Sibal at the CII's Industry-IT Summit 2013 in New Delhi.

The report discusses the trends in IT enablement of Indian businesses and lays down the opportunities, challenges and the role of different stakeholders - IT providers, end-user industries and the government need to play in faster and better penetration of IT.

Speaking at the summit, Sibal stressed on the need for the Indian industry and the government to work in tandem for realizing new horizons and opportunities in Indian IT sector.

He emphasized the need for a consistent policy framework for the IT sector from along term perspective which will help transform the business landscape with enhanced IT adoption, and in turn create a significant contribution to India's GDP.

He said that the government triparte policies on IT, Electronics Systems & Design and Telecom will enable the End-users, IT service providers and Government to partner with each other and leverage information technology to achieve and maintain the desired economic growth rate.

Kris Gopalakrishnan, President-Designate CII and Founder & Executive Co-Chairman of Infosys Ltd, said: "Effective IT adoption by Indian companies will be key to realizing India's GDP growth potential. It will improve the competitiveness of the industry, help them grow faster, capture new markets and create new jobs in the future.

"For IT adoption to happen in a fast and efficient manner, it is critical for all the key stakeholders - end-users, IT suppliers as well as the government to work in tandem to achieve this goal."

Bhaskar Pramanik, Chairman- CII National Committee on IT, ITeS and e-Commerce and Chairman Microsoft India, said: "For business leaders across verticals, increasing growth, building a competitive advantage, enhancing user productivity and reducing cost of operations are the most common agenda items.

"The CII-BCG report clearly identifies Information Technology as one of the most important levers that will help in realizing end user industries´ vision and transforming businesses."

Neeraj Aggarwal, Partner and Managing Director, The Boston Consulting Group, said: "The Indian industry is at an inflection point and one of determinants of the future trajectory will be the speed with which Information Technology gets adopted.

"The IT spending in India is expected to grow at a healthy 12% per annum, rising from Rs. 99,700 crores in 2011 to about Rs. 175,400 crores in 2016. Businesses in India are not only looking at the traditional IT usage in their organizations, but are also showing keen interest in the next wave of technology - cloud, big data and mobility - that will help them leapfrog the technology adoption cycle."

Arvind Subramanian, Partner and Managing Director, The Boston Consulting Group, said: "The government in its role as a ´buyer´ of IT can have significant influence on accelerating the penetration of IT in India. Indian government currently spends only about 0.3% of the GDP on IT as compared to 1.2% by UK and 1.1% by the US.

"Government needs to increase its focus on IT-enabled citizen services, improving public sector efficiency, investing in disruptive technologies and promoting shared services across government departments."

Key Highlights: CII-BCG report on IT enablement of Indian Business

IT for India - New Horizons, New Opportunities

. The domestic IT industry is expected to grow at 12% over next 4 years, reaching a size of 1.76 lack crores by 2016, driven primarily by the services and software segments

. The role of the IT functions within end user industries will evolve from "order takers" to transformative "business partners" as IT adoption picks up

. The report highlights the unique requirements of Indian companies that makes it imperative for IT providers to adapt their global products portfolio and delivery models

. Report outlines a 8 point action plan to ensure active collaboration of key stakeholders - end user industries, IT providers and the government for greater IT adoption in India

1. User industries need to create a clear vision for the role of IT in their organizations with well defined roadmaps

2. User industries need to strengthen their capabilities to manage IT effectively by enhancing the required IT related systems and processes

3. IT providers and user industries need to work collaboratively to identify business needs and opportunities and work together to realize them

4. If not already in place, IT providers should develop a differentiated India strategy

5. To be successful in India, IT providers need to optimize their delivery model for lower costs

6. Government to facilitate IT adoption through policies, programs and incentives

7. Government should also facilitate development of quality IT workforce

8. Government to partner with the private sector to leverage cutting edge IT and foster innovation along with building the required IT capabilities to orchestrate its IT projects

. IT adoption across end user industries is not the same-some sectors like banking, telecom and insurance have leveraged IT across their business functions, including the back-end organizational processes, customer facing activities and revenue generating initiatives, and are at an advanced stage in IT adoption. Sectors like education, healthcare, media and retail are relatively low IT spenders currently, but are expected to significantly increase their expenditure on this front in the future.

. Several domestic IT companies have built strong IT capabilities in the last decade and today boast of a marquee global client base. While traditional pricing advantage that IT providers enjoy in global markets may not be relevant for the domestic market, they now have the opportunity to play in value-added areas by serving as optimization agents and transformation partners and deliver value through process improvements and technology-led transformations.

. IT providers are attempting to understand the unique and evolving needs of Indian end user industries aiming to employ India-specific strategies for the domestic market. IT providers are developing the required partner network, applying multiple cost levers and adapting innovative commercial models to fully tap the Indian opportunity.

. In recent years, Government has taken the right steps in some areas for example, UID , education. Going forward, Government needs to focus on providing more IT and IT-enabled citizen services, improving efficiencies in the public sector, investing in disruptive technologies, standardizing data, and promoting shared services. These initiatives will need to be supported by a strong execution and governance model to effectively leverage IT.

. Effective IT adoption by Indian companies will be key to realizing India's GDP growth potential. It will improve labour productivity, generate employment opportunities, and help improve employability of labour in India.

. To successfully leverage this opportunity, a concerted effort is required by end users, IT providers and the Government. With a renewed thrust, the Indian IT industry can sustain the expected growth rates, and garner a far larger share in the portfolios of its home grown companies.

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