India’s top enterprises including Hero Honda, Asian Paints and retailer Shoppers Stop plan to reduce their IT budgets by up to 12%, or keep it flat, even as they spend around $20 billion on buying new computer hardware, software applications and other infrastructure this year.

The country’s outsourcing vendors including Tata Consultancy Services (TCS), Infosys, Wipro, HCL and Mahindra Satyam see the domestic market as nearly $1 billion opportunity, which includes government customers too.

Multinational rival IBM, which counts Bharti Airtel among its top customers is currently leading the domestic outsourcing market, according to experts. At least six chief information officers (CIO) of companies from segments of telecom, retail, manufacturing, banking and financial services and technology told ET that the focus of their IT spend has shifted to getting more bang for the buck.

For instance, India’s biggest motorcycle maker Hero Honda has launched a project called “Good Life” aimed at converting customer records and other data from manual to digital form and bring down costs. “At the end of the day, it is about creating value for our customers. We cannot do that if the internal costs are so high. This is where technology helps,” said Hero Hondo CIO Vijay Sethi.

Until two years ago, many Indian companies attempted to adopt the latest technology solutions and even planned massive upgrades of their business IT systems, and shelved them last year after the global economic crisis hit them.

“One of the priorities is to reduce IT costs by 12%,” said Tamal Chakravorty, regional head process and IT at Ericsson India, the Swedish telecom equipment maker. Ericsson India spends about 3% of its total revenues on IT investments.

For Ericsson, newer technologies such as Telepresence will help bring down costs too. According to experts such as Praveen Bhadada, an analyst with research firm Zinnov Management, customers from the telecom segment spent nearly $1.68 billion on IT, accounting for 8% of the total spend.

“We have a combination of projects-some inhouse and some done by third party. We have product life cycle management solution in place, we have also enhanced the customer/vendor portals and are working on the social networking strategy,” said Sethi of Hero Honda.

For automakers and manufacturing companies, which invest around 2-4% of their revenues on IT, integrating supplier networks and increasing their supply chain efficiencies top the agenda. According to Zinnov, auto companies are now pushing their supplier base.

“Many original equipment manufacturers (OEM) are now pushing their tier one, tier two counterparts to be innovative and move up the supplier base,” said Bhadada.

Telecom, together with BFSI, manufacturing and government, accounts for nearly 80% of the total IT investments in the country, according to Zinnov.

Now, customers from retail, BPO, IT and healthcare are also catching up. For retailers such as Shoppers Stop, customer relationship management (CRM) solutions, business intelligence and inventory management top the IT spend priority.

“Tools that help analyse customer data, merchandise and contractional data are gaining priority,” said Arun Gupta, chief technology officer of Shoppers Stop, which spent around 1.2% of its total revenues on IT last year.

“Our IT priorities are threefold, first is to contribute to the business growth which includes exploring and experimenting, second is to optimise existing systems and processes and third is to innovate on new technologies and processes,” Gupta added.

Companies are aiming for constant innovation but with lesser costs. This, for instance “drove Asian Paints to set up a inhouse call centre for centralised order taking,” said Manish Choksi, CIO of Asian Paints. CRM, social networking, Web 2.0 and tools for disaster management are among areas where Choksi is planning to spend.

The manufacturing sector invested as much as 34% on IT this year which is 0.8% of the revenue as compared to last year when the IT spend was 0.2% of the companies’ revenue.

Source:http://economictimes.indiatimes.com/infotech/ites/India-Inc-plans-to-cut-IT-budgets-by-12/articleshow/6103514.cms