Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian IT: How does the future look like - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Indian IT: How does the future look like

Jan 5, 2009

The Indian IT industry started stretching its wings in the early 1990s with India liberalising the economy and embracing the world which was getting flattened by forces of globalisation, changing demographics and conversion of technology. The industry has since then witnessed tremendous growth. However, the recent financial crisis and economic slowdown in the US and European countries have marred growth of companies from the sector. Amidst financial crisis and economic downturn, IDC, a leading technology research agency, has projected the following growth trajectory of Indian IT industry. IDC expects that Indian IT industry will enter into new growth phase which will be built on the back of new and innovative services sought by consumers and enterprises. The technology behind these services—infrastructure, applications and connectivity—will need to orchestrate and re-orient completely in order to support their mass adoption. The firm has termed this growth phase as “Growth Phase 2.0”, which is expected to evolve 2009 onwards.

As per IDC, domestic IT/ITeS market is expected to grow at a compounded annual growth rate (CAGR) of 16.4% in next five year (Growth Phase 2.0) as against growth rate of 24.3% recorded during 2003-08 (Growth Phase 1.0).

IDC expects that during this growth phase, the Indian IT/ITes industry is likely to witness relatively slower growth that in turn will see enhanced competition leading to a rapidly changing strategy and continuous market re-alignment on the part of IT /ITes companies.

India Domestic IT/ITeS market: Size and Growth Rate Trends,2003-2013
Source: IDC

Furthermore, IDC expects that the combined India domestic IT/ITeS market to grow at a slower rate of 13%. The domestic IT market is expected to grow by 11% during the year, while the domestic ITeS market is likely to grow by 41%.

The current financial crisis and economic slowdown is going to change the face of Indian IT. The growth which has been witnessed in the past will taper off and the industry will enter into a new growth phase which will be slower. The industry will have to leverage its infrastructure which IT companies have built over past few years. Indian IT companies will need better management of IT infrastructure for their most optimal deployment and use in order to achieve future growth. As for our view on IT stocks is concerned, we believe the leading players are currently available at attractive valuations. This is despite factoring a slower growth over the next 2 to 3 years.

To Read the Full Story, Subscribe or Sign In
To Read the Full Story, Subscribe or Sign In

Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms


Mar 25, 2019 (Close)


  • Track your investment in INFOSYS with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks