According to Gartner INC, Indian banking and securities companies will spend around Rs. 417 billion on IT products and services in 2013, an increase of more than 13 percent over 2012 revenue of Rs. 369 billion.

This forecast includes spending by financial institutions on internal IT services (including personnel), IT services, software, data center technologies, devices and telecom services.

IT services will be the largest segment in overall spending category at Rs. 131 billion in 2013, due to a strong focus on the financial services sector by IT services providers, it is growing stronger than other segments at nearly 18 percent compared to 2012.

Software is the second fastest growth segment, in spending on pace to increase 17.1 percent, followed by internal services (that includes IT personnel) at 15.7 percent. In the software segment, desktop software and enterprise resource planning (ERP)/supply chain management (SCM)/customer relationship management (CRM) will exceed the 20 percent growth landmark with 22.1 percent and 21.7 percent, respectively.

Although we have seen a number of requests from Indian banks regarding the modernization and legacy replacement of core banking systems, the major issue for many of those banks is still the gap between front-office and back-office services. This explains the growth rate for 2013 in the vertical specific software segment at 17.3 percent. We also see increasing adoption of packages, especially for ‘lite’ core banking systems to address modernization and replacement.