Indian State-Run Firms Spent $3.1 Bn On IT: Study

State-owned firms spent $3.1 billion on information technology in India during 2008 and the amount is expected to top $5 billion by 2011 at an annual growth of 19 percent between 2007-2011, says a new study by Springboard Research.

More than two-thirds of the total spending will be led by the federal government, with states accounting for 22 percent and local governments for another 11 percent says the study on public sector IT opportunities in India by the market research firm.

"The re-election of the Congress-led United Progressive Alliance (UPA) government will spur further investments in e-governance projects, including the $5 billion national e-governance plan," said Nilotpal Chakravarti, senior research analyst at Springboard.

He said the government's strong commitment to improve the delivery system by leveraging information and communication technologies would propel investments by the public sector and offer significant opportunities for vendors eyeing this high-potential space.

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Projects like national ID cards, defence tactical communication system and providing computer and broadband access to schools across the country are forecast to act as further drivers of the growth of India's public sector spending on IT.

The report also notes that education is the biggest individual market segment in terms of spending with 11 percent share of total spending. Defence and public safety and taxation and finance round up the list of the top three segments.

Hardware corners half the spend, while services has a bigger share than software.

The current challenges vendors face include slow decision-making process, bureaucratic delays, complex bidding procedures and a price-sensitive market.

On the other hand, end-users, primarily citizens, face challenges due to lack of transparency and efficiency in government services, lack of integration among different state-run agencies and poor complaint handling mechanisms. (IANS)