IT spend by PSUs in India valued at US$ 8.5 billion in FY 2012

Zinnov, a market expansion and globalization advisory firm,today released its report onIndian PSU landscapecapturing interesting facts and figures on the burgeoning PSU segment in
India. According to the report findings, Public Sector Units (PSUs) in the Indian economy account for USD 383 billion of turnover in FY 12 with a revenue growth of 11 per cent since 2009. The sector gives employment to 1.4 million with 40 per cent of PSU companies operating in the manufacturing sector.

The report highlights that theInvestment in technology is the key trend which is shaping up the growth of the sector. PSUs are looking at investing into technology to help address the challenges they faced in early years of transition towards establishing a more transparent and accountable organisation, reduce the cost of production and enhance productivity and customer reach. IT spend accounts for 2 per cent of total PSU revenues higher than most other verticals.According to the report findings, energy and BFSI are the major PSU verticals for IT investments.

Further the report talks about some of the major challenges which have impacted the growth of the Indian PSU sector. Presently the major challenge faced by the PSU sector is the Talent Related Challenges resulting in lack of performance incentives in terms of recognition and accelerated growth paths for workforce giving rise to productivity challenges. In addition to this, other challenges like lack of quantitative benchmarks against domestic private companies or global equivalents is affecting the performance of the sector while Broad based decision making structure (stakeholders with overlapping responsibilities) is resulting into the lack of accountability.

Talking about the findings from the study,Praveen Bhadada, Director Market Expansion, Zinnov said,
India is a hub of 225 PSUs operating across verticals, with 16 of these companies featuring in the global list of top 2000 companies. With their growing size and dominance, PSUs have started looking at IT to address the global competition. Examples like SBI which has done one of the largest Core Banking Solution implementation globally or BPCL which has made early investments in Big data make the segment very lucrative for the technology companies

Commenting on the relevance of the investment in the PSU sector, he addedIT is viewed to be a major cost reduction enabler in many PSUs by automation of processes and integrated IT set ups. Today PSUs are looking at IT to analyze customer information efficiently and develop targeted and customized offerings for customers

The report concluded that Indian PSUs are expected to witness a turnover of more than USD 1 Trillion by 2020 and a large part of the growth will be attributed to investments in modern forms of IT including cloud, big data and mobility.

Key Findings of the Study:

*IT Spend accounts for 2% of total PSU revenues higher than most other verticals

*Energy and BFSI are the major PSU verticals for IT investments

* 225 PSUs in
India with annual turnover of $383 billion is home to 1.4 million employees

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