Competition forcing IT cos to hike spending
Rising global competition is forcing information technology companies to adopt automation in their own workplaces, which in turn is pusing up their IT spending. The industry is increasing investments in systems for customer relationship management and work force management for better productivity monitoring.
Chetan Pathak, Vice President Enterprise Solutions at Ramco Systems told that IT companies were using home-grown applications earlier, and then they were buying the best of the breed applications from experts despite the increase in costs. Pathak did not feel that the rupee appreciation against the doller would really affect IT spends.
However, he said that an increase in the percentage off offshoring cases, compared to onshoring, in recent times due to high costs was scaling up IT spends of Indian IT companies. On the average, spends of mid-cap IT companies have been growing annually at 30 to 40 percent, by 40 percent for top IT companies and 30 percent for small companies in the last couple of years.
According to C.R.Venkataraman, (Executive Vice President at Technosoft) the company had spent about Rs.15000 per month per person on extra overheads on its manpower costs like rent, electricity, transportation, office space, IT infrastructure, among others, last fiscal.
Technosoft expects to spend about Rs.20000 per person per month in the last couple of years. An additional Rs.4000 to Rs.5000 per month is spent on licence fee on software like payroll, HRM and CRM systems, Venkataraman said.
Commensurately, big IT companies are belived to incur Rs.40000 per person per month as costs on manpower while small companies incur costs in the range of Rs.5000 per person per month. Venkataraman said with an increasing number of MNCs coming to India and setting up offices in metros, property prices were doubling, increasing pressure on resources, salaries and resultant costs.
V.Shankar Raman, Chairman and Managing Director of Quintegra Solutions Ltd said that the company had spent about 6 percent of its revenue as IT spend last fiscal and expects a 30 to 40 percent growth in this fiscal. Venture capitalists were increasingly insisting that new software companies in the US using VC funds should have their development centres in India due to cost economics.
