IT spend by Indian PSUs valued at $ 8.5 bn in FY'12

According to the Zinnov report findings, on Indian PSU landscape capturing interesting facts and figures on the burgeoning PSU segment in India, PSUs in the Indian economy account for $383 bn of turnover in FY 12 with a revenue growth of 11% since 2009. The sector gives employment to 1.4 mn with 40% of PSU companies operating in the manufacturing sector.

The report highlights that the investment 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 organization, reduce the cost of production and enhance productivity and customer reach. IT spend accounts for ~2% 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."

The report concluded that Indian PSUs are expected to witness a turnover of more than $1 tn 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.