Consumer-centric technology will drive the future growth of services, which is one of the fastest growing sectors in India today. While the vertical chiefly comprises the hospitality industry, among others, the telecom sector is also emerging as a major growth booster in this segment.
Nearly 60 percent of our respondents were from services companies with revenues of over Rs 1,000 crore; 18 percent have between Rs 500 crore and Rs 1,000 crore in revenues; another 18 percent between Rs 100 crore and Rs 300 crore. However, only 6 percent of respondents said they were spending more than Rs 30 crore on IT, and another 6 percent said they spent between Rs 20 crore and Rs 30 crore. The majority of respondents—53 percent—said they spent Rs 10 crore or less. On the other hand, IT spends are set to increase in 2008.
64 percent of the respondents said their companies would spend more on IT in 2008. Another 29 percent said they would increase their IT budgets by more than 40 percent, and about 35 percent said that they would hike budgets by 20-40 percent.
‘‘We have had a capital expenditure of about Rs 20 crore every year over the last 5-6 years on new installations and deployments. We spend about Rs 10 crore more on maintenance annually. Now the capital expenditure might go down slightly, but maintenance costs will remain the same. Also, spending will be on certain modernization projects that are at hand,’’ says N B Mathur, GM, IT, Airports Authority of India.

Recovering services
Disaster recovery and information and data security were ranked as the top spending priorities by the larger service companies that responded to our survey. 17 percent of respondents with revenues over Rs 300 crore said that these were the priorities. ‘‘Disaster recovery technologies are important for us to face the aftermath of natural calamities. It was not so until last year, but the thinking has changed,’’ says Mathur.
Affirms Prasad Dhumal, Head, IT, DHL Express (India), “Disaster recovery and business continuity planning is high on our agenda for the next year. We will be able to host local applications that cannot be centralized in our data center in Malaysia for technical or local business reasons.” Business intelligence and backup solutions came next in the order. A whole set of technologies or activities—corporate portals, WAN infrastructure, CRM solutions, blade servers, systems and application integration, and storage systems—all seemed to weigh equally on the minds of CIOs from the sector, perhaps indicating that spending would be spread across many competing priorities.
Additionally, global trends on security (increasing use of biometrics), e-ticketing (now a rage in India) and quality management are driving IT needs in the services sector.
Nevertheless, and in line with our survey findings from other sectors, CIOs in the services sector also identified aligning IT with business as their greatest challenge, along with that of implementing security and privacy measures, as testified by 33 percent of the respondents from companies with over Rs 300 crore in revenues.
Most services companies want to integrate their processes and manage the entire IT infrastructure in a centralized manner. For example, Reliance Communications wants to integrate its systems and manage operations from its DAKC campus at Navi Mumbai.
Other important challenges included that of retaining skilled resources. India’s supply of graduates and technologists is not able to keep pace with industry demands.
“It is important for us find short-, medium- and long-term solutions for this issue so as to maintain India’s reputation as a leader in IT and technology services,” says Anil Gajwani, CTO, Bharti Telesoft.
The second concern reflects security and privacy issues, as more and more companies are outsourcing work, and the major question on their minds is always: ‘How safe and secure is my data?’
Sumit Chowdhury, CIO, Reliance Communications, explains why. “If companies want to an address international audience and larger companies in India, they better have their compliance issues in place. As the role of a CIO is getting integrated into that of a business strategist as well, aligning IT with business requirements takes paramount importance.”
The government, on the other hand, has its own set of issues, typically those of selecting and implementing new technologies and also managing complexity and evolving requirements. “We had top management commitment, which in this case, is the government, or else projects wouldn’t have been sanctioned. However, it wasn’t easy going either. Change management was a serious issue. In the government, problems arise even when you have top management commitment. However, to the credit of the Indian Railways, they could see that the project was working, and always supported us,” reminisces Amitabh Pandey, president & head, e-business, Thomas Cook, who gave up his job at IRCTC to join the organization.
Desktop systems support, disaster recovery and customer support activities are the activities that are most likely to be outsourced by services companies in the coming year. The three accounted for about 35 percent of the responses from this vertical.
Web services and virtualization technologies, 48 percent of the respondents from the sector said, would have the biggest impact on IT infrastructure in 2008. Unified Communications gathered 20 percent of responses and Software-as-a-Service gathered 14 percent of responses from CIOs in the sector, both as high-potential impact technologies.

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