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Nasscom study projects e-biz in India at Rs 1,950-b. by 2005

Fakir Chand in Bangalore

The Boston Consulting Group, the global e-business strategy consulting company, is upbeat about the rapid growth of the Internet in India, and its crucial role in driving the economy during the current decade, the ongoing technology meltdown in the industry notwithstanding

In a joint study, commissioned by Nasscom, with a special focus on India, BCG has projected the total e-commerce transactions volume in India to reach a whopping figure of Rs 1,950 billion by 2005 from the current Rs 150-200 billion.

"Business-to-business transaction are likely to dominate this growth with an estimate of Rs 1,920 billion, and business-to-consumer transactions at Rs 30 billion," declared Nasscom chairman Phiroz Vandrevala in Bangalore on Thursday at the two-day national conference on e-commerce and e-business 'E-biz India 2001', organized by the software industry organisation.

The Nasscom-BCG report 'on e-commerce opportunities for India Inc', also projects a $9-billion business opportunity for Indian IT companies from the global e-solution services market by 2005.

"The domestic market for e-solutions is expected to grow from a base of $65 million in 2000 to $500 million in 2005. In the area of e-solution product, the Indian IT industry is likely to achieve a business of $1 billion by 2010."

"To maximise the opportunity, the Indian software industry will have to leverage its existing strengths, viz., acceptance of offshore/onsite service delivery model, migration from one-off projects to deep client relationships and superior value-price ratio. They will also need to modify their marketing and implementation approach to suit e-solution sales and build domain expertise in select industry verticals," Vandrevala stated.

The study is also optimistic that around 75% of the global IT services market will be packaged solutions by 2005, of which supply chain management and customer relationship management segments will account for 72 per cent. In India, automotive and consumer goods' sectors alone are expected to lead the B2B adoption by 25 per cent to 30 per cent, respectively.

Among the four industry verticals, in the consumer goods sector, the BCG estimates that almost 15-20 per cent of durable buyers will be seeking information on products online by 2005.

Similarly, in the automotive industry, about 20 per cent of all supplier transactions and around 45 per cent of dealer transactions are expected to be online, resulting in an overall b2B transaction volumes in the range of Rs 510 billion by 2005.

In the telecom sector, the BCG findings reveal that about 20 per cent of all supplier side transactions of hardware manufacturers and 10 per cent of transactions with distributors are likely to be online, resulting in a combined online transaction volume of Rs 53 billion.

The B2C market in the financial services sector is projected to be Rs 3 billion, while, the B2B transaction volume (online brokerage) is to be Rs 900 million.

Elaborating on the need for a new approach to tap the e-commerce opportunity, Vandrevala said there was a growing realization that pure-play dot-coms in many industries are unlikely to be successful.

"Full benefits of e-commerce cannot be realised in isolation of the overall business goals and absence of an offline presence," he added.

BCG vice-president James Abraham said unlike most other reports, which indicate the e-biz adoption in India based on the growth pattern in the developed markets like US, the Nasscom-BCG study provides an in-depth analysis of the existing scenario within various industry verticals and then extrapolates the market potential for the Indian IT industry.

"To be successful in the e-commerce arena, Indian enterprises need to invest as much in non-IT related spending as in IT-related spending. The CEOs who embrace e-commerce opportunities will have the potential to alter the balance of power," Abraham affirmed.

In conclusion, the report said: E-commerce is not dead; it is alive, well and spreading its realms quickly. The current pessimism is just a natural stage of evolution because the power of the Internet is unchanged and is already being harnessed by several companies abroad and in India.

"In this context, the study recommended that collaboration will be required between various stakeholders, viz., corporates, the IT industry, and the government to extract the full value of these changes," it added.

The joint study, conducted during January-May 2001, was based on interviews with 150 Indian companies across the board, and involved quantitative as well as qualitative analysis, including extensive research.

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