Market research: India on a roll

Market research: India on a roll

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GIS Development and Deve Sonnen


IT IS WELL ACKNOWLEDGED THAT THE INDIAN GEOSPATIAL INDUSTRY IS WITNESSING A GROWTH RATE SIGNIFICANTLY HIGHER THAN WORLDWIDE AVERAGE OR THAT OF ANY OTHER COUNTRY. SEVERAL SURVEYS HAVE TRIED TO MEASURE THIS GROWTH TRAIL WITH NOT MUCH OF SUCCESS. IN THIS EDITION, GEOSPATIAL WORLD BRINGS A SCIENTIFIC MARKET RESEARCH WITH DETAILED QUANTITATIVE ANALYSIS OF THE INDIAN INDUSTRY DYNAMICS IN ASSOCIATION WITH DAVE SONNEN, CONSULTANT, IDC

What's in…

  • Market potential
  • Market overview
  • Policies, standards & best practices
  • Productive capacity
  • Way ahead

India's 'Vision 2020' envisages the nation evolving into an information society and knowledge economy built on the edifice of information and communication technology (ICT). ICT including geospatial technologies is being integrated into planning and management of natural resources, utilities, infrastructure and urban development and transport sectors. Geospatial information technology (GIT) is being assimilated into planning and management to monitor, evaluate and apply spatial planning and decision support systems (SPDSS) and is also a front running agenda for major government agencies.

MARKET POTENTIAL
The Indian geospatial industry's current annual productive capacity is about `3,944 Cr (39.44 billion) (`represents Indian Rupee). The industry is expected to grow at a cumulative average rate of 8.1% to a productive capacity of `5,818 Cr. (58.18 billion) by 2014. The total allocation for various projects incorporating geospatial technology among other components in different sectors is `623,494.8 Cr and considering that even 1% of this allocation is meant for geospatial technologies, the geospatial component works out to be `6,234 Cr.

MARKET OVERVIEW
The Indian geospatial industry consists of two distinct but mutually supporting segments. The larger, international segment is geared to provide geospatial data and software development services for international organisations, primarily in North America and Western Europe. The other segment, the domestic segment, caters to providing geospatial capabilities to the Indian data providers/users. This segment is funded, managed and controlled largely by national and state governments. A number of Indian firms are contracted to provide services for government initiatives. India's bimodal industry structure creates high market potential and worrisome constraints. While India's geospatial market potential has never been higher, realising this potential would be challenging. The Indian growth rate is significantly higher than worldwide geospatial industry growth. This can be attributed to the following factors.

Economic recovery
The macro economic recovery is still fragile, volatile but positive. Assuming continuing improvement, the Indian economy is poised to grow about 6.5% in 2010, one of the most robust GDP growth rates worldwide.

Growth of India's international geospatial business will depend largely on the economic recovery of international economies and businesses. Right now, recovery rates in North America and Europe are at least positive, a welcome change from 2009's contraction. Planned spending on internal Indian geospatial projects is almost as high as India's total productive capacity. So, internal geospatial growth will depend on two interrelated factors: how the GOI spends its planned budgets; and how the industry develops capacity to meet internal demand.

Economic recovery will create another interesting market potential. In a recession, customers question existing processes and cut all but essential elements. As economic conditions improve, customers have a fresh perspective of what was possible with less. When they begin to invest again, users will jump on innovations that provide a major advance cheaper, faster or better.

Outsourcing of data acquisition and software development to India will still be considered a proven way for companies to do more. It is expected that the outsourcing business will increase at a brisk rate as the worldwide economic recovery continues unless hampered by protectionism in certain geographies.

Government initiatives
The Government of India (GOI) has budgeted wide range of initiatives that have a significant geospatial component. These initiatives, along with state and local level initiatives, have the potential to motivate a much stronger internal capacity for Indian geospatial technologies.

The geospatial data usage in India is supported to a large extent by initiatives set out by the Federal government through its ministries and various departments. While defence is the major user of geospatial technologies, the initial lead for the usage of geospatial technologies in India was taken by the natural resources sector. Now, solutions such as decision support systems, asset management, enterprise wide risk assessment etc. have opened up avenues for this technology in almost every sector. The recommendations of the steering committees and the working groups for the 11th Five Year Plan for the majority of sectors highlight the importance of using geospatial tools in proper functioning of the sector and indicate the commencement of a new phase for the geospatial sector. As shown in Table 1,in the 11th Five Year Plan, majority of the sectors have emphasised on the usage of geospatial data in their current functioning and launched various new schemes which mandate the use of geospatial technology.


In addition to the schemes highlighted in Figure 1, there are various other schemes which are not essentially geospatial but will use geospatial tools and technologies as an aid, such as schemes for construction and maintenance of roads, railways and waterways, civil aviation, public utility services, education, health, command area development, flood management programme, flood control, urban renewal, urban water supply, rural water supply, Integrated Watershed Management Programme etc. , as shown in Figure 2.



IT transformation
Information technology (IT) is transforming into a foundation- level capacity for world economies. In the geospatial arena, transformational influences will come from three directions – advances in information and communications technologies (ICT); advances in worldwide geospatial technologies; from cultural and political changes, including the open movement and a compulsive push towards broad economic development.

The rate of change in Indian geospatial capacity tends to be slower than in North America and Europe and parts of Asia for two basic reasons:

First, the acquisition and dissemination of Indian geospatial data (particularly aerial remote sensing) is subject to certain policies of the Government of India (defence/internal security). While the Indian capabilities in the area of Earth Observation (EO) are world class, data dissemination, particularly to private organisations is again subject to these policies.

Second, in view of the above 'restrictions to growth' in the domestic market, Indian geospatial capacity has been developed, to a large extent, to address the requirements of international businesses. These requirements are likely to undergo paradigm changes brought about by increased automation/ technological innovations. Thus the current capacities, built on the requirements of the existing international markets, may not be sustainable. Today, India's geospatial industry is well-equipped to handle current requirements. But, as the pace of IT transformation accelerates, geospatial data acquisition and programming will be increasingly automated, reducing the demand for current capacities. Geospatial capabilities will become an important but invisible element in most information systems.

To keep pace, India will have to develop substantial new capacities for design, development and deep systems integration. These capabilities are likely to be substantially different from those required to meet current market requirements.

The Indian geospatial industry, however, could likely be constrained by the following factors:

  • Lack of skilled manpower and inadequate education/ training for geospatial technologies
  • Policies and planning for GOI geospatial projects not being adequate in certain sectors
  • Competition from other Asian countries
  • Security impediments to data acquisition/dissemination and lack of accountability in the government which comes in the way of rapid deployment of new technologies
  • Technological innovations which may shrink demand for traditional geospatial data acquisition and software programming services.

POLICIES, STANDARDS AND BEST PRACTICES
It is often said that, "If you don't get governance right, it is hard to do anything right." This truism certainly applies to information systems. As earlier mentioned, the Indian geospatial industry has adapted well to international policies, standards and best practices conforming to the norms of offshore services. Now, India requires a significant geospatial capacity, conforming to the domestic market requirements fostered by forward looking policies. Current GOI initiatives offer little guidance about geospatial standards, data reuse or access. Policy makers and the industry will have to cooperate on these important matters building models for effective utilisation of available funds in a time-bound fashion.

Fortunately, one can take advantage of the considerable expertise and established standards that are available from organisations like the Open Geospatial Consortium (OGC). How well the Indian policy makers and the industry are able to implement the advice of OGC and others will have a significant impact on the growth prospect of the industry.

PRODUCTIVE CAPACITY
Due to the service oriented nature of Indian geospatial industry, it is pertinent to look at productive capacity to understand the current geospatial industry, predict growth rates and assess the impact of future market factors. The estimated total productive capacity for 2009 is shown in Table 2, while Table 3 shows the estimated geospatial revenue capacity for 2010-2014.



WAY AHEAD
It is expected that the annual growth rate will slightly exceed GDP for 2011 and 2012 as global economies continue to recover. Figure 3 highlights the percentage growth for the Indian geospatial industry vis-a-vis worldwide growth, while the projected revenue capacity for the Indian geospatial industry is shown in Figure 4. There is a significant increase expected in productive capacity after 2012 as India's geospatial industry builds out capacity for new international and internal markets. Like India's GDP, the growth of India's geospatial market will outpace growth rate for geospatial markets in the rest of the world. The market assumption and impacts are shown in Table 4. There are several ways in which vendors and users can gear up to realise the full potential of the expanding Indian geospatial market. With the Indian geospatial industry being bi-modal, one segment servicing international markets, and the other segment serving internal needs, it is prudent to address the two segments separately.




Recommendations
International geospatial service industry
Prepare for global IT and service transformation. Information technology is transforming to an always-on, realtime phenomena that pervades every aspect of business and social life. In the past, IT involved the maintenance of mainframe systems that were connected to PCs. Now, IT is about a complex network of computers, phones, building automation, sensors and mobile devices that are deeply imbedded in the fabric of business and industry. Web 2.0 and real-time business analytics are driving applications directly to the customer or employee and becoming mission-critical on the way.

In the transforming IT environment, the geospatial information part of IT infrastructure will be constantly updated by location-specific transactions and sensors – automatically. Open standards and increasingly open access will make geospatial information an integral, but invisible part of customer and business experience. This transformation may take a decade to realise. As IT transformation progresses, traditional project-based geospatial services are likely to become increasingly less necessary and may eventually diminish. Indian businesses/ geospatial industry needs to adapt to this transformation by building deeper design, innovation and service delivery capabilities, so that they are ready for new IT demands. The key is to continue to remain relevant and viable in this dynamic environment.

Prepare for increasing competition from other Asian countries. India has firmly entrenched its position in providing off-shore geospatial services and IT services generally. Emulating India's example, most other Asian countries are developing their own IT service capacities. Many service firms are developing "multi-shoring" capabilities and are working on ways to standardise technologies / production methods, deliver services online, and expand into business services. These capabilities can make the service firm an integral part of their customers' operations. That is good news for some service firms, but this is likely to diminish the project-based work.

The remaining work will likely be picked up by lowercost service firms elsewhere in Asia. Understandably, the margins here would be lower. The response to this evolving situation is similar to the response needed for the broad IT transformation discussed earlier. Indian companies will need to develop the capabilities required to become an integral, always-on part of their customer's IT infrastructure. This will require new skills, capabilities and business models.

Importance of open standards and open source. There has often been an adversarial relationship between IT vendors and the open community. But now, open standards and open source have established their value and can no longer be ignored. Open standards, like those developed by OGC, enable data sharing, reduce development costs and lower implementation risk. Open source software can provide a powerful way to extend information systems to much broader audiences and can increase financial returns. Open approaches can also lower short-term profits, so new business models and customer relationships are required. But, the returns from open, standardised approaches almost always outweigh the costs.

Internal geospatial service industry
India's international geospatial industry is mature, efficient and well-organised. India's internal geospatial situation appears in sharp contrast – at crossroads, emerging from a 'closed' environment to a gradually 'open' environment. Initiatives like the Association of Geospatial Industries (AGI) are expected to transform the parties into a cohesive body, geared up to address the emerging (geospatial) challenges in the country. The formation of the OGC India Forum also bodes well for the industry.

These initiatives are timely, as the potential for India's internal geospatial markets is enormous. Current GOI plans call for geospatial capabilities that are larger than the geospatial industry can currently provide. As India's economic development unfolds, geospatial capabilities will be an integral part and will grow at vigorous rates.

Indian vendors and governments could consider the following actions to build needed capacity and capture the emerging markets' full potential:

Gain from the experience of others: India's geospatial situation is quite similar to Europe's twenty years ago. The European Union (EU) recognised the value of consistent, standard geospatial information and created a policy framework that facilitates the best use of geospatial information for economic development. The EU initiative, INSPIRE, has taken years and endured lot of political turmoil to establish. INSPIRE is still a work in progress, but it works. INSPIRE has become an integral part of the EU's policy and legal framework. INSPIRE is dynamic and builds on the ongoing efforts of standards groups like the OGC, national security agencies, and many diverse mapping agencies. There is no good reason for India to incur the costs, time and political expense that the EU has already paid. While India's situation is unique, the principles that the EU has developed will be valuable and can reduce the time and costs of GOI geospatial projects.

Planning for data integration and reuse. GOI's plans for geospatial projects offer little guidance for data integration and reuse. Today, most geospatial projects are managed by local groups with little thought given to how the outputs can be reused. GOI's projects are large and still gaining experience, so certain shortcomings are to be expected. But, in the long run, the current lack of longterm planning, design and data architecture is likely to force the government to rework the current projects, before the state and national governments can realise the benefits of integrated systems.

Training new geospatial professionals. Current GOI geospatial projects will require more skilled workers than are available or will be trained by the current education system. This situation will create a skilled manpower shortage and will drive up labour costs unnecessarily. The geospatial industry would need to consider ways/means to improve the educational system for geospatial workers at skilled and semi-skilled levels.

Organisational mechanism to effect policies, standards and best practices: In North America and the EU, professional geospatial organisations play an important role in defining policies, setting standards and recognising best practices. These organisations represent users, vendors and government, often in the same forums. The working relationships and social connections developed within these groups are the basis for effective action at all levels. In this arena, the recently formed Association of Geospatial Industries (AGI) and the OGC India Forum are timely. It is hoped that the emerging geospatial community will participate and strengthen those organisations. If that does occur, those organisations can become a valuable channel for policy makers, vendors and users alike.

Analysis of return on investment (ROI): Often geospatial projects are implemented without any ROI assessment. Many projects include some cursory assessment done as a gesture toward "good management" and forgotten soon after. Without any clear understanding of real value, geospatial projects are often seen as just an exercise in spending money. People managing effective projects, measure returns constantly. The reason is simple: Unless the project's value is understood, the project has little value. This simple and clear lesson from successful organisations is often forgotten in the rush to "get the work done."

CAPACITY BUILDING
Capacity building is key to capitalise on the opportunities presented before the Indian geospatial industry. India is taking due note. India has well defined courses in various disciplines of geographical information science at undergraduate as well as post graduate levels. The courses are run as an allied subject to geography or as stand-alone courses in GIS, Remote Sensing, Geoinformatics, Geomatic Science, Surveying etc. Public-private partnership is also making its presence felt. Recently, Rolta signed a formal MOU with Central Board of Secondary Education (CBSE) as the resource partner for providing Geospatial Technology Vocation Course, for XI & XII standard students. This course is an initiative of the Human Resource Development ministry under the leadership of Minister Kapil Sibal as a part of its vision for education sector and to provide employment for a large number of youth in the country.