McKinsey Sees Indian E-Biz at $10 bil by `08
By Uday Lal Pai
India Correspondent, asia.internet.com
[December 21, 1999--MUMBAI] The value of e-business in India may reach US$10 billion by 2008, states a McKinsey-Nasscom report.
The tremendous growth of the business-to-business (B2B) segment will fuel Indian e-biz.
India has the potential to generate e-business worth about $4 billion in the next five years, and this would go up by another $6 billion in the next three years. The B2B transactions would account for 80 per cent of this with business-to-consumer (B2C) transactions making up the rest.
The study recommends to Indian players the need to adopt either a customer relationship management, infrastructure support, or product innovations as one of their strategies to flourish in cyberspace.
The report states that as per conservative estimates, Indian industries can achieve 0.3 percent online penetration by 2004 and 1 percent penetration by 2008.
However, the report cautions that the growth of e-business in India will depend largely on development of the correct environment. It cites the absence of a regulatory regime and cyberlaws, and poor telecom infrastructure as impediments. The study expressed hope that bottlenecks to e-business growth in the country will soon be removed.
Internet-based supply chain solutions, standard software packages and improvement in transaction times, cost and quality would be the prime factors for the B2B segment growth.
The growth of the B2C segment would be mainly due to increased household penetration, secure payment mechanisms, discounted offerings and personalized and easy access to information, the study says.
The advertising revenues will be around 20 percent of the B2 revenues in 2008, the conservative projections say, whereas the aggressive estimates say that four percent of the total advertising, online or offline, will be done on the Net by that year.
According to McKinsey, e-biz will be a relatively small sidebar to the Indian IT story. It has predicted that in 2008, the Indian software industry will be a $87 billion business. Exports will account for $50 billion, while the domestic market will bring in the rest.
Further, Indian e-com start-ups will parallel their US counterparts in driving innovation, leaving open the possibility of India becoming a hub of innovation in the IT industry by 2008, the study says. |
