India's Public Sector Forecast: 2012 To 2017

The most critical factor driving the Indian public sector over the next five years will be India’s 12th national five-year plan, which covers the period from 2012 to 2017. I have just published a report on the plan that provides a comprehensive review of India’s new government spending framework and what it means for ICT vendors looking to successfully position for success.

Forrester estimates that India’s public sector IT purchases will grow at a CAGR of 14% between 2012 and 2017, reaching $108.5 billion in 2017. In 2014, we anticipate a decrease in government spending due to parliamentary elections — but spending will pick up after the election, as maintaining GDP growth will be on the agenda of any new government. We believe that massive infrastructure investments and increasing citizen expectations will fuel public sector IT in spite of the 2014 parliamentary elections. Citizens are pressuring federal, state, and local government to become more proactive and interactive and to provide services in a more organized and user-friendly manner. A recent Forrester survey of government IT buyers in India spotlighted this heightened focus on citizen services:

Based on a thorough analysis of the 12th five-year plan approach paper and in-depth interviews with Indian government officials and ICT vendors, Forrester has identified the key government priorities that will create the greatest opportunities for IT vendors over the next five years. To gauge the opportunities for ICT vendors, we have evaluated the revenue potential for these priorities across five IT market segments (hardware; infrastructure and platform software; packaged and industry software; systems integration; and IT consulting and training) and four solution categories (analytics; cloud computing; mobility; and social media and collaboration). Forrester believes that five key government investment priorities warrant special attention from vendors looking to exceed average ICT spending growth in the public sector over the next five years:

  1. The Aadhaar project will be the center of IT focus and massive spending.
  2. Public safety and security systems will continue to receive strong attention.
  3. Leveraging technology to improve the quality of education and skills development
  4. Improving tax collection efficiency by state and city governments
  5. Improving rural healthcare infrastructure

Public sector technology opportunities across hardware, soft ware, and services are at different levels of IT purchase size and growth in India. IT software and services will provide the best combination of revenue and growth. Analytics, mobility, cloud, and social media will also generate strong growth, but from a smaller revenue base. Nevertheless, the lack of a government CIO role, scattered state data center initiatives, mixed public/private partnership successes, and threats around the UIDAI program will continue to affect government spending. Successful IT vendors will be aware of these challenges and approach the market with strategies that minimize the risks they pose.