With offices reopening, India’s enterprise networking market grew at 13.6% YoY in 4Q21: Report

India’s networking market which includes ethernet switch, routers, and WLAN (wireless local area network) segments witnessed a 13.6% year-over-year (YoY) growth in terms of vendor revenues during 4Q21 (Oct-Dec), stated an IDC report. With organisations looking to re-open campuses, the investments in the non-DC networking infrastructure have grown significantly over the last few quarters.

“However, the vendors were still seen to be battling with chip shortages, increasing freight costs, and increased import costs due to currency fluctuations,” pointed out the report.   

Infrastructure lead times have currently risen to the levels of 26-28 weeks for many vendors and are expected to stay the same for some more quarters to come with the Russia-Ukraine conflict worsening the scenario. However, as vendors are looking to clear their shipment backlogs, IDC expects the next few quarters to have steady market growth as demand for networking infrastructure looks very stable.

The report mentions that switching business in India had a 25.7% YoY growth by vendor revenue during 4Q421. The non-DC switching business had a significant YoY growth of 41.5% owing to the sharp decline in 4Q20 revenues due to Covid-19. Organisations, specifically in the services segment were starting to invest significantly in the non-DC segment ahead of office opening in April 2022. DC switching had a high single-digit growth rate of 9.3% YoY during 4Q21. Key industries that contributed to the switching business include services, telecom, manufacturing and government.  

After a strong run-up, India’s router market stayed stagnant with 0.1% YoY growth by vendor revenue and sequentially declining by 10.6%. Service providers contributed to 61.4% of the router investments and were primarily responsible for the decline. However, enterprise router investments grew by 25.1% YoY with enterprises investing in routers for regular refreshes and investments that were aimed at deploying solutions like SD-WAN. Apart from telecommunications other key verticals for routing include manufacturing, finance, and services.

The WLAN segment witnessed a marginal growth of 4.5% YoY by vendor revenue. While the enterprise WLAN grew strongly with pent-up demand from organisations coming through, the consumer wireless demand softened with offices reopening and the festival season in India coming to an end thereby posing only marginal growth for the overall WLAN segment. The enterprise WLAN segment exhibited a very strong 45.4% YoY growth and consumer WLAN declined by 22.0% YoY.

Traction for Wi-Fi 6 in Indian enterprises expanded, with Wi-Fi 6 contributing to 75.7% of access points revenues during 4Q21. The demand for Wi-Fi 6 adoption is fueled by the exceedingly increasing lead times for previous generations of wireless access points caused by semiconductor shortages.  

“Though vendors were struggling with operational challenges like ever — expanding lead times and increasing input costs, demand for network infrastructure remained healthy. The market for campus investments — both for wired and wireless business expanded rapidly during 4Q21. Vertical segments like education which did not spend for a considerable period started spending on network infrastructure,” said, Sudharsan Raghunathan, Senior Market Analyst, Enterprise Networking, IDC India.  

“Cloud-managed infrastructure was gaining more traction than usual considering the ease of deploying and managing infrastructure specifically in verticals such as services, education, retail, etc. Enterprises are largely beginning to realise the benefit of NaaS as it would help them migrate to an OPEX model without compromising on the quality of service. Network infrastructure vendors are gearing up to cater to specific demands on the enterprises by building easy-to-use management consoles and flexible commercial models as part of their NaaS offerings,” Raghunathan said.