Businesses Fuel Tech Demand

Growing demand for personal technology such as multimedia cell phones and PCs isn't the only thing fueling India's IT market. Growth in the country's domestic industries is, too. As sectors of the Indian economy--including auto-component manufacturing, airlines, pharmaceuticals, and telecom--expand, companies are upping the amount they spend on IT products and services.

In a speech last fall, Cisco Systems CEO John Chambers said India could challenge China in terms of revenue from business customers within four years. Indian companies are more likely to buy complete "solutions" of hardware, software, and IT services than IBM's Chinese customers, who tend to buy "point products," says Inderpreet Thukral, director of strategy at IBM India.

Indian companies also are expanding through acquisition. Business airline Jet Airways last month said it would buy rival Air Sahara for $518 million. The deal comes as airline-passenger growth in India exceeds 20% a year. Generic drug maker Ranbaxy Laboratories last month said it's pursuing acquisitions in the United States and Europe. Last week, rival pharmaceutical company Dr. Reddy's Laboratories said it's bidding against Ranbaxy to acquire the fourth-largest German drug maker, Betapharm Arzneimittel.