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India’s IT spending to grow at 14% in 2012: IDC report

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According to global market research firm International Data Corporation’s latest report, India emerges to be one of the strongest economies for IT spending worldwide in 2012. IDC expects a 14% growth in IT spending in India which is significantly higher than overall worldwide growth levels of 6%.

IDC’s strong growth forecast for India seems to be in-line with current market and industry trends. More businesses are going online as India’s internet population continues to display a solid upward trend. Companies are betting on this trend by investing to bring IT products, services and solutions to Indian businesses and masses alike.

It spending Growth

Microsoft recently partnered with Bharti Airtel to deliver Office 365 via the latter’s cloud platform. ICICI, India’s largest private sector bank launched Electronic Branches and Tablet Banking among other technology driven banking innovations. Venture capital firms like Accel Partners are continuing to invest and fund a range of Indian online portals including e-tailers like flipkart.com and e-ticketing platforms like bookmyshow.com.

Skeptics could possibly argue that the fact that companies are investing in IT services and related infrastructure does not necessarily ensure that the masses will bite the bait. However reports and forecasts seem to align with current market trends.

For example, Internet and Mobile Association of India (IAMAI) reported a 73% growth in rural internet users in 2012 while Vizisense found that more than 2 crore mobile internet users have halved their content consumption from newspapers and TV in favour of online media. In a recent interview with ET, N. R. Narayana Murthy was asked whether the good times for Indian IT Industry were over to which he replied

"I do not think the story is over; the story is yet to begin in my opinion".

Forecasted growth in IT spending in US remained below par at 5.3% for 2012.

IDC’s report mentions that the launch of Windows 8 will deliver a much needed boost to IT spending. Additionally, analysts and experts including Michael Feroli, Chief Economist, JP Morgan, believe that the much awaited release of the new iPhone will have a significant impact on the US economy. "Calculated using the so-called retail control method, sales of iPhone 5 could boost annualized GDP growth by $3.2 billion, or $12.8 billion at an annual rate" he mentioned.

When iPhone 4S was released in October 2011, US telecom services provider AT&T made over 2 lakh pre-order sales within the first 12 hours of opening order lines. Apple added that more than 10 lakh orders were received within the first 24 hours of the device’s launch. Apple is expected to surpass these numbers when iPhone 5 will be launched in next 24 hours.

JP Morgan expects sales figures for the new iPhone to top 80 lakh in Q4 2012 in US alone, reported ET. Amazon’s new Kindle Fire HD tablets and Kindle Paperwhite e-reader are also likely to contribute to the spurt as Christmas approaches.

In other markets around the world, IDC’s forecasted growth in IT spending in China and Brazil is at par with India at 14%. The Eurozone crisis seems to have taken a toll as IDC expects marginal growth levels of 1%.

The shipments of tablets and smartphones combined with strong software sales in Northern Europe contribute in bringing growth levels in green, despite the slowdown in ailing Western European economies like Greece, Ireland and Spain.

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