In the information and communication technologies (ICT) sector sales growth is expected to continue in most western markets and emerging markets such as China and India. In many countries, innovations such as cloud computing are expected to still see double-digit growth rates, while only in Brazil the recession has begun to hit the ICT sector hard. Despite the generally favorable business environment for the sector, some problems remain such as fierce competition in many segments, with strong pressure on margins and sales prices. This is also the case in markets like the China. While many larger players can count on economies of scale, smaller partners are faced with more problems, unless they are highly innovative and/or consolidated companies in niche products. However, product life cycles remain short and medium-long term sustainability cannot be separated from the ability to develop new products and support them with marketing strategies aimed at quickly satisfying the target markets.
Atradius Market Monitor predicts another year of strong ICT growth in India, thanks to the support of a robust economic momentum (+6,7% expected) and a more accommodating political environment. According to analysts, global ICT spending to increase by 11,6% in local currency terms to reach a total value of INR 2,45 trillion. The growth path should continue beyond the medium term, with a compound annual rate (CAGR) at 11,6% for 2015-2019 and a market value projected to exceed INR 3,8 trillion in 2019. While the main driver this year will be the notebook, an exploit is also expected from tablet products after the contraction recorded last year. Cloud computing will then offer further opportunities and services for small and medium-sized enterprises (SMEs) providers. However, the constraints to growth come from increased global competition, with high rates of software piracy and the potential volatility of foreign exchange and currencies. In the first quarter of 2015 exports of IT services to non-US markets, including Europe, were hit hard by the exchange rate of the dollar against other major currencies. THE'National Association of Software and Services Companies (NASSCOM) indicate how India's Outsourcing Services Export Revenue Growth Rate of 12%-14% is Projected During Financial Year 2015-2016. Future growth in the sector will be fueled by increased demand in global companies for new services, see digital technology, mobile applications and cloud computing. The cloud computing market in India is still in a nascent stage, but rapidly evolving, under the impetus of global suppliers such as Cisco, Microsoft, Amazon and IBM. Not forgetting the growing number of IT start-ups in the local market. According to the NASSCOM and Zinnov report from last January, India has emerged as the fourth largest startup base globally. Tuttavia, caution is advised towards IT reseller firms where liquidity and solvency problems persist, being mostly partnerships and/or sole proprietorships with very low margins affected by tough competition and price and currency volatility. And while financial information is readily available to incorporated companies, major difficulties persist in the case of partnership and/or sole proprietorship companies that are not required to submit their annual accounts through the Registrar of Companies (ROC), usually not being willing to share information with third party partners. In such cases, in addition to taking into account qualitative factors, it is advisable to request and obtain an up-to-date status of financial documents, together with a detailed trading history.
