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Is 'green' the next big market for Indian IT? - Views on News from Equitymaster
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  • Aug 11, 2009

    Is 'green' the next big market for Indian IT?

    Green IT and cleaner technology are the buzz words that we hear every now and then. Well, this article is not about making IT green; but rather about making 'Green' happen through IT.

    Corporate dossiers and annual reports are replete with initiatives undertaken by IT firms for cutting their carbon-foot prints. While through inward looking approach of using cleaner processes, IT industry can make good some of the damage it causes to the environment, a lot more can be done using IT. No, we are not talking about corporate social responsibility here. We are talking about the sea of opportunity that lies in front of Indian IT industry in terms of cleaning the environment.

    Here are some facts:

    • Industry bodies suggest that by 2015, the market for systems supporting green accounting will be worth at least US$ 595 bn. Big businesses will revamp their spending on system for carbon accounting and sustainability reporting three times by then.
    • According to Gartner, by 2010, environment-related issues will be among the top five IT management concerns for more than 50% of state and local government organisations in world.
    • Gartner also predicts that by 2011, large global enterprises will mandate their suppliers to prove their "green credentials" via an audited process.

    In short, a huge market lies ahead for the IT service providers who can indeed help these organisations go green. Indian IT giants surely don't want to remain late-movers in this. It is evident from the fact that most of the big IT players like TCS, Infosys and Wipro are building specific offerings around the new vertical that is termed as "Ecology" or "Environment".

    Indian IT companies can go a long way in developing smart solutions to enable their customers in cutting costs and curbing environmental damage. These solutions can range from smart logistics, smart infrastructures to smart meetings. Indian IT firms are also seeing this as an opportunity to climb up the software value chain by providing "Green IT Consulting" to clients across industry verticals.

    Wipro's endeavors in this regard are worth a special mention. Wipro, India's 3rd largest IT services company is leveraging its presence in IT as well as lighting and consumer care business to use IT to provide cleaner solutions. No surprise that it won the Delhi metro rail project to provide eco-friendly low energy consuming lighting for 27 stations. The company is expecting that green services and solutions to bring in up to one-fourth of the company's revenue, three years from now. Azim Premji, Wipro's Chairman, recently signaled that his company is betting big on green technologies as he believes that green technologies with huge business potential, have a future as bright as the IT sector.

    The company already has in its portfolio, offerings like energy diagnostic tools, energy consulting practices to offer green IT services to its Fortune 500 customers. The company aims at generating 10% of consulting revenues from green IT consulting in the next couple of years, reaching US$ 500 m by 2010.

    No doubt, ecology and environment business is in a nascent stage. The sector indeed looks risky in the short term as companies fighting recession will find it hard to invest in eco-friendly technology. Still we suggest watch out for IT companies that are foraying into the green! We believe that sooner or later, this sector will gain utmost attention, for the obvious reason - survival.



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