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Global Growth

The IT Landscape in India: What Global Retailers & Telecoms Need to Know

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India has been undergoing digital transformation at a fever pace and is on track to multiply the effort through 2020. The government of India has announced plans for multiple massive initiatives to bring smaller towns and villages across significant swaths of rural residential regions much more abundant and convenient connectivity.

India is now one of the world's largest telecom markets, with 1.17 billion subscribers. The country's mobile communications sector has been rapidly growing over the past 15 years, and is anticipated to become a substantial contributor to the nation's GDP, according to an estimate from the Global System for Mobile Communications (GSMA).

If you’re a global retailer or telecommunications company planning to do business in India, here’s what you need to know.

Digital India

India has become one of the world's largest populations of internet users, with nearly 494 million as of March 2018. Overall, tele-density was at nearly 90 percent as of June 2018.

The government of India’s Digital India initiative, currently one of the world's largest technology projects, includes all projects that involve IT or telecom. This vast and many-faceted national tech development project includes:

  • Making broadband services available through villages' panchayat (local governments), anticipating 100 percent tele-density.

  • Digital literacy programs.

  • A National Optical Fiber Network, which will provide broadband infrastructure on the back end. The government is looking to work with telecom companies on broadband services delivery to consumers via the new fiber optic network.

The continued rising mobile-phone use and commensurately falling costs of data are together projected to increase internet use across the Indian subcontinent by 500 million users over the next five years. That is expected to generate an abundance of new business opportunities. By 2023, monthly data use in the country is expected to soar from 3.9 GB (2017) per user to 18 GB.

Smartphone purchases have risen by about 14 percent annually to reach 124 million in 2017. As a result, more affordable purchase prices and service rates are predicted to drive telecom industry growth in India over the coming years.

Retail: The Central Focus of Telecom Development in India

The retail sector remains at the center of telecom strategies. Recently, global goliaths including Amazon, Google, Microsoft, and Alibaba have brought new data centers online in India. Local competitors are following suit, with NxtGen leading the push toward greater development of AI development.

Additionally, ESDS leads in hosting managed services for the smart cities to be digitally developed as one of several major projects in the Digital India cluster of initiatives. And CntrlS has made India the largest tier 4 data center in Asia.

Xiaomi plans to have 5,000 stores in India by late 2019, IKEA plans to invest $1.5 billion to open 25 stores in India, and the list goes on. Old predictions that ecommerce would shrink conventional stores have so far not been fulfilled. Brick and mortar retail stores are instead now growing more rapidly in India than in the past.

Indian retail consumers are demonstrating their preference for retaining the option to shop in-store. So, naturally, retail will continue to be central to telecom companies' strategies for distribution.

On the other hand, total transactions made through mobile wallets increased by 5 percent monthly, to exceed 325 million transactions in mid-2018. With that and the vast nationwide increase in internet accessibility, it can be reasonably expected that the internet will increase in appeal for users, and retail strategies will come to include broader integration of online services for customers.

Telecom Development in India

The number of telecommunications subscribers in India increases daily, spurring new investment and development in this economic sector. Idea Cellular and Vodafone India have merged to become the nation's largest telecom company, and data published by Department of Industrial Policy and Promotion reportedly indicates that the telecom industry has drawn in $31.75 billion in FDI from early 2000 to mid-2018.

Indian Government Telecom Development Initiatives

The government's technology policies and high consumer demand account for the country's rapid telecom sector growth. The greater access to telecom equipment along with the government's conducive regulatory posture and increasingly affordable prices have enabled more consumers to participate in the telecommunications consumer market. Further, Foreign Direct Investment (FDI) deregulation has created one of India's top few generators of employment opportunities.

Government-led technology initiatives were announced in 2017. Since that time, the Department of Telecommunication has rolled out its “Tarang Sanchar” web portal, for sharing mobile tower information as well as EMF Emission Compliance information.

The Indian government is working to facilitate aggressive growth for telecommunications providers. Included in the wide scope of its sweeping technology initiatives are:

  • Complete setup of more than a million common service centers with internet access.

  • Increase the FDI cap on telecom investment from 74 percent to 100 percent for infrastructure developers who provide voicemail and email as well as dark fiber.

  • Digital India will network all economic sectors (retail, manufacturing, healthcare, etc.) through the internet.

  • An upcoming new National Telecom Policy directed toward encouraging new investment of $100 billion collectively across the telecom sector over the next four years.

Projected Future Revenue Growth of Telecom in India

Telecom equipment sales revenues in India are projected to reach over $26 billion by 2020. Total internet subscription sales are predicted to increase 100 percent by 2021 to bring India's total number of users to an astounding 829 million. Total IP traffic is predicted to increase to 400 percent of the current rate during that same period.

These are the most broad-scoped technology projects in India over the next several years. Global retailers and telecom companies alike should know about these four:

  1. 100 Smart Cities Project: The Digital India urban technology upgrade project includes investment in 100 cities throughout the country, to transform them into more convenient and sustainable communities. The project will involve creating such improvements as upgrading infrastructures, traffic management, smart parking solutions, Wi-Fi hotspots and more. The IoT will be a pivotal component of the developments for residents of these cities.

  2. Next Generation Network: The BSNL government telephone exchange will be replacing the exchange, which is three decades old, to allow management of voice data multimedia and an array of other kinds of communications services in the new Digital India. BSNL is anticipated to roll out its 5G service by 2020, when it will launch that upgrade globally. BSNL is collaborating with the goal of developing a powerful 5G mobile ecosystem, which will further benefit Indian and all other users.

  3. Cloud Services: India is today's second most rapidly growing Asian market for cloud services, exceeded only by China. As mentioned, Amazon, Google, and other leading global cloud operators have new data centers in India. The country's cloud services market for the public has grown by a staggering rate, from $1.3 billion in 2016 to $1.8 billion in 2017, and is predicted to reach $4.1 billion by 2020. Despite persistent high-speed connectivity and bandwidth issues, cloud use is increasing in response to businesses' growing need for flexibility, scalability, and so is a focus of Digital India.

  4. Wi-Fi Hotspots: BSNL is creating high-speed BSNL Wi-Fi hotspots in both urban and rural areas of the country. The Indian government looks to establish a Wi-Fi-based network link under the auspices of local village panchayats to deliver broadband services as part of the Digital India program. Above 1,500 Megahertz of spectrum were planned to have been made available by 2016 over various bands of frequency. However, it's unclear when these are going to be available for mobile services.

For more information about the IT landscape in India, or if your company is doing business in India and you need IT support anywhere, anytime, contact us for a consultation. With our established partnerships in India, we can help you make sure that your retail tech or telecommunications deployment there is a successful one.

 

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Chad Mattix

Written by: Chad Mattix

A global IT executive experienced in establishing strategic partnerships for large U.S.-based organizations, Chad Mattix specializes in managed services, contract pricing and negotiation, and the startup and growth of technology services companies. Chad has spent the last 15 years helping large U.S. retailers and U.S.-based IT service providers expand their capabilities across the globe to follow their clients’ expansions. He has developed and completed full entity formations in Brazil and China and has worked with sales pursuit teams in messaging and client-facing presentations. He has also established global alliance and partnership models for multiple global IT organizations. Chad travels around the world to develop and maintain long-term relationships with employees, clients, vendors and partners, which are critical for success.

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