Nikkei Electronics Asia -- October 2008
India Focus
India Sustains Growth in PCs, Managed IT Services

India's PC market grew 8.1% in the second quarter of 2008, with shipments of 2,085,000. Growth was driven largely by notebook PC shipments, which rose a high 51.2% over the period, while desktop PCs registered a decline of 2.4%, according to the "Quarterly PC Tracker 2008, 2Q 2008" report, released by IDC India recently. 

For the overall PC market, HP retained the top spot with a market share of 18.7%, followed by HCL in second place, then Dell, which moved up to third place during 2Q 2008. In terms of desktop PCs, HP retained its top position with a market share of 13.9% during the second quarter of 2008, followed by HCL and Dell respectively.

In terms of notebook PCs, HP also retained the top position, with a market share of 31.2% in the second quarter; Dell moved up to second position while Acer remained in third place.

"Performance of the second quarter was affected by cautious PC buying, as the Indian economy is expected to grow only at 7.5% to 8% in the fiscal year ending March 2009," said Kapil Dev Singh, country manager, IDC India. "The subdued sentiment derives its signals from high petroleum prices, rising inflation, political uncertainty in the last quarter and news of the impending US economic slowdown." 

Sumanta Mukherjee, analyst, Computing Products Research, IDC India, added that during the second quarter, major multinational and Indian PC vendors promoted their low-cost notebook PC offerings, and the growth of these upgradeable notebook PCs is expected to be driven to a large extent by the penetration of broadband connectivity and the availability of useful content.

IT Services

Meanwhile, other research by IDC indicates that the domestic managed IT services market is expected to grow at a CAGR of 24.9% to become a US$2.78 billion industry by 2010, making it one of the fastest growing markets in the Asia-Pacific region. The total India managed IT services market in 2007 was estimated to be US$1,170 million, with managed network services accounting for the biggest share of the pie, followed by managed desktop services. This represented 20% of the total India domestic IT services market, which topped US$5 billion in 2007.

Seepij Gupta, assistant manager, Software & Services Research, IDC India, said the traditional IS outsourcing model is under siege, and 'risk and reward' deals are now becoming popular. "Today, service providers are launching low-cost, highly flexible service delivery platforms that leverage 'commoditized technology' to provide more 'productized services' to customers." 

Gupta said that the market initially witnessed large user enterprises adopting infrastructure management services (IMS) as they looked for competent partners to manage their increasingly complex IT infrastructure. Today, even mid-market enterprises are opting for this model as they realize the need to concentrate on the core objective of delivering value to their customers, rather than deploy resources in running and maintaining IT infrastructure.

Moving forward, the fastest areas of growth are expected to be security, storage and data center services. "IDC predicts security and storage services will grow at CAGRs of 31% and 28% respectively over the next three years (2008-2010)," said Gupta. "Today the market for these services is still nascent. However, their adoption rates are expected to pick up at a fast pace as these services become inevitable for the extended business enterprises." 

Praveen Sengar, senior manager, Software & Services Research, IDC India, added that while engaging in outsourcing contracts, management should have a clear vision of its long-term organizational goals along with activities that can be outsourced. A sound process for selecting the right vendor must be employed; prospective partners need to be evaluated on multiple parameters, and not just on cost alone.

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