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Monday, December 17, 2001

IT consultation services may be hit, Dataquest predicts

THE Indian IT services expenditure is projected to reach $-1.6 billion in 2001, a 25.2 per cent increase over 2000 revenue of $ 1.3 billion, according to industry analyst firm, Gartner Dataquest. The industry is forecast to continue growing strongly through 2005, when IT services revenue will reach $ 5.8 billion.

While the global economic slowdown and the uncertainty resulting from terrorism and war are expected to dampen growth somewhat through 2002 in many segments and countries, Gartner Dataquest believes overall demand will continue to experience double-digit growth from 2003 through 2005.

"Following 2002, increased confidence in the economy and business will present vendors with an opportunity to benefit from renewed demand among end users of IT services based on exploiting technology innovations," Rolf Jester, research director for the Asia-Pacific IT Services market at Gartner said. "Our local research shows that IT management services continue to do well despite sluggish economies. From late 2002, we expect networking, security and telecommunications technology related services as well as e-business initiatives to be strong drivers of demand."


"India has mostly been viewed as a provider of IT services to the rest of the world. But the domestic market is showing high growth rates as Indian enterprises take increased advantage of the business benefits of using external services providers," Jacqueline Heng, senior analyst for Gartner Dataquest's IT services group, said.

Economic and political uncertainty is expected to hit consulting the hardest of all sectors, the growth rate coming down to only 7.7 per cent in 2001, extremely low for the Indian market. However, individual consulting areas such as security, business continuity planning, networking generally, and e-business related work would remain bright spots in the picture.

Another study by Dataquest concluded that the economic slowdown would spell the end of the one-stop-shop telecommunications vendors. "Of the world's eight leading telecom equipment vendors, all of which until this year were aiming to become suppliers of practically all gear needed by their carrier clients, none will be able to realise this dream," Bhawani Shankar, principal analyst for Gartner Dataquest's Worldwide Telecommunications and Networking group said . "Although the leading players will remain, their product portfolios, their market focus and, indeed, the nature of their relationships with their clients is destined to change radically," Shankar said. —TNS