Focus on customer’s business outcomes
MANISH BAHL Vice President & Country Manager Forrester Research
Poor economic policy, high inflation, delayed reforms, the rupee’s fall against major currencies, multibillion-dollar scams and political gridlock are all negatively affecting the country’s growth.
The GDP growth fell under 5 percent in the first nine months of the fiscal, and this slowed the growth of IT purchases. As a result, we have revised our forecasts for tech spends in India in 2013 from the earlier estimate of 7.3 percent to 6.5 percent in rupee terms.
We expect the Indian economy to pick up in 2014, although at a slower rate, thanks to the positive impact of good monsoons, uptick in exports due to the weakening rupee, and infrastructure projects which we expect to take off once the new central government is in place. While we expect enterprise IT spends in 2014 to grow at 8 percent in the local currency, in dollar terms it will remain flat.
There remain four formidable threats that may impact the economic outlook: political instability after the national elections would have a long-term economic impact, higher public spending and lower revenue growth may increase the fiscal deficit, industrial growth may decline further due to sluggish manufacturing performance, and a further decline of the rupee would worsen economic woes.
Notwithstanding the macro challenges, we believe that over the next few years three trends will drive the IT spends of Indian organizations.
Redefining customer engagement strategies: Digitally-empowered customers are forcing firms to redefine their engagement models to survive in the age of the customer. In our recent survey of Indian CIOs, nearly 87 percent of the respondents said that their top business priority is to address the rising expectations of customers. Lowering the firm’s overall operating costs is much further down the list of priorities.
Increasing business involvement in tech decisions: As the boundary between IT and business blurs, business units are getting directly involved in technology discussions as a means to differentiate their organizations and drive business growth by transforming the customer experience.
Focusing on customer-oriented business outcomes: The difficult economic landscape has forced Indian firms to look for new and innovative ways to create efficiencies, improve customer responsiveness, and drive business growth. They are looking for ways to apply technology to deliver targeted business outcomes faster, better and also cheaper.
Although computers, peripherals and communication
The difficult economic landscape has forced Indian firms to look for new ways to be efficient.They want technology to deliver targeted business outcomes
equipment will continue to dominate overall technology spending in 2014, software and services will gain the most from the sharper focus on customers.
The quality of the software that Indian enterprises use to address frequently changing business and customer needs will be critical. Also, firms increasingly require business-driven consulting and delivery arrangements with their service providers to respond to customer needs.
We expect the services and software segments which account for 17 percent and 21 percent of the IT spends of Indian organizations to grow at 13 percent and 11 percent in 2014.
In particular, BI and real-time analytics, security, public cloud, mobile applications and big data will be the hot spots in 2014. On the services side, IT outsourcing, consulting and systems integration will lead overall tech market growth.
What it means
As organizations face pressure from digitally-empowered customers to re-define their engagement models, CIOs will start to re-evaluate their vendor relationships and add a customer-focused agenda to their vendors’ performance metrics.
We believe that Indian CIOs will be willing to assume the risk of working with new vendors in the market to foster innovation with the aim to de-emphasize products and services in favor of business outcomes as business results—not products or solutions—differentiate CIOs and their technology vendors in the eyes of business executives.
MANISH BAHL VICE PRESIDENT & COUNTRY MANAGER, FORRESTER RESEARCH