Today in Tech: IT Spending in 2012, Correlation Ventures & More

IT Services spending in 2012 to grow by 2.3%: Gartner

Several reports on Gartner's estimates of global IT spending had an upbeat tone. The research firm has raised its estimates from 2.5% to 3%. Companies will spend $3.6 trillion on IT in 2012. "While the challenges facing global economic growth persist — the eurozone crisis, weaker U.S. recovery, a slowdown in China — the outlook has at least stabilized," Richard Gordon, research vice president at Gartner said in a press statement.

What does it mean for Indian IT companies? Not much.

IT Services will grow only by 2.3% in 2012 (It grew 7.7% last year). This translates to an incremental spend of 19 billion dollars. That seems to be a big amount – close to 20% of the Indian IT sector, and double the revenues of India’s largest IT services firm. But these two numbers also indicate why its impact will be small. Assuming that India will not grab significantly more share in the market this year, this should translate to an additional 2 billion for the entire sector in India. In other words, nothing that will make Indian IT companies happier.

However, Gartner is a little more optimistic for 2013, estimating that companies will spend 4.4% more on total IT, and 4.8% more on IT Services. This is how the chart looks like.

Here's the table:

Worldwide IT Spending Forecast (Billions of U.S. Dollars)

Source: Gartner (July 2012)

Predictive Analytics Software in VC investments: It's Faster. But, is it better? Sometime back I met a professor at IIT Madras who was developing – along with a couple of his students - a model that would help team owners value IPL players. It was pretty fascinating.

However, using and analysing data to make more informed decisions is not new in sports. Michael Lewis even wrote a book about it – and it was made into a movie starring Brad Pitt last year. People have tried this approach even in less structured and more creative pursuits such as movie making. The most famous example is of course Epagogix, thanks, in part, to a beautiful essay Malcolm Gladwell wrote in New Yorker.

So, it should come as no surprise that a venture capital fund has been using a computer programme to invest in start ups. Technology Review has a piece on a company called Correlation Ventures which uses a predictive analytics software to zero in on investments. The biggest benefit: speed. “The effort adds efficiency to the investment process. And for entrepreneurs, it means far faster answers: rejections come in as little time as two days,” it says.

I am not sure if faster means better. I don’t know how it will measure up against the VCs who take pride in their instincts and in their ability to spot talent and sense passion in entrepreneurs. I suppose, it's too early to take a call on that.

However, I found this sentence from the story to be interesting: “Once it makes an investment, Correlation backs off and doesn't take a board seat. That policy is itself data driven: the firm's analytics show that companies with more than two VCs on the board are less likely to be successful.”

I know a few entrepreneurs who would agree - vigorously.

Also of interest

• Apple reportedly shutting down unauthorized third-party beta sales, restricts iOS 6 to licensed devs : Engadget
• Multitouch Pioneer Jeff Han on Why He Sold His Company to Microsoft: AllThingsD
• GitHub: Andreessen Horowitz's $100 million bet on developers : Fortune
• Bribery, Porn, and Spam Are the Path to Riches in the App World: Wired
• 12 Insanely Great Companies Founded By Former Apple Employees: Business Insider
• Bain Capital MD Ajay Agarwal: What's the next big thing? This VC has an idea--and he's willing to put big money behind it. : Inc.

The thoughts and opinions shared here are of the author.