Indian government IT spend highest in Asia

Sufia Tippu
Thursday, 27 July 2006 09:03

IT Industry - Market

India’s expenditure on IT in the public sector will be the fastest growing in Asia, surpassing China over the next three years, according to a new report.

Indian government IT spending is forecast to grow from $1.4 billion in 2005 to $2.9 billion in 2009 with a growth rate of 19.6%. This growth rate beats China, the second fastest growing country in Asia, which is expected to have a growth rate of 14.6% during the same period.

According to a study by Springboard Research, a Singapore-based research firm which specializes in high value IT market research, the largest segment of spending within the government sector in India was the internal security and defence sub-vertical -- consisting of the entire defence establishment, internal security and public safety agencies, border control and immigration, and intelligence.

This sub-vertical accounted for 14.4% of the IT spending in the government sector, with public education having the second largest share at 11.4%. The fastest growing area of IT spend was in managed healthcare with a compounded annual growth rate of 22.1% from 2005-2009.

The study titled “IT Spending in the Public Sector in Asia: Opportunities Abound”- examined key trends in the public sector in Asia and provided in depth and granular information on the government sector in these markets.

“India is playing catch up where the public sector is concerned, but it is making the key technology investments that are needed to help maintain the high rates of economic growth and to increase the speed and efficiency with which government services are delivered,” said Tirthankar Sen, research manager of Springboard’s India Research Centre. “The government understands that heavy investments in technology are needed to help India continue in its efforts to modernize the public sector and attract foreign investment.”

Jonathan Silber, Senior Market Analyst- Public Sector for Springboard Research, added, “India is among the lowest ranking countries in Asia for per-capita spending on IT in the public sector, but based on the growth rates we are seeing, we feel that India is making the investments needed to increase the efficiency and capability of government services. As the Indian economy continues to post high growth rates, it will be crucial for the government to make sure that technology investments are being made to support this economic growth.”

Springboard also found that within IT spending in the public sector, spending on hardware accounted for the lion’s share of expenditure with 60% followed by IT services at 23% and software at 17%.

Interestingly IT services are expected to be the fastest growing area of IT spending in the public sector with a CAGR of 21.9% from 2005-2009.