Microsoft today said it's bullish on India, especially the government's ongoing efforts to move services online.

"The Indian government has a large-scale initiative for IT services," said Microsoft Regional Technology Office (Asia Pacific) Head Michael Thatcher.

Speaking to PTI in Singapore, Thatcher pointed out the near 12 per cent compounded aggregate growth rate for the industry between 2008 and 2013.

He said, however, the Indian IT sector faces major challenges, especially in integrating the the IT system between central government operations and the autonomous state-based operations.

An equally big challenge would be to work in the diversified Indian market, ranging from modernised institutions with IT connections and the vast majority of rural population yet to be served by the technology, Thatcher said.

Going forward, Microsoft is working through its New Delhi office and Bangalore Research and Development Centre on serving the Indian markets, especially basing its output on the IDC forecast investment in the IT sector which by 2013 would be Rs 1.64 lakh crore, by 2012 Rs 44 lakh crore, by 2011 Rs 1.26 trillion and this year Rs 1.11 trillion.

Microsoft is also following on with the IDC projected investment on Cloud plus Clients which for this year would be Rs 88.2 billion, increasing to Rs 219.98 billion next year and almost doubling to Rs 406.78 billion in 2012 as well as Rs 67.78 billion in 2013.

"Markets will change as institutions start using 'clouds' facilities and this would extensively reduce pressure on IT investments," he said.

Thatcher said: "Cloud will reduce new capital expenditures in IT as it can leverage existing assets to access the new 'cloud-based' IT services."

This would shift IT spending towards operational expenditures and a move to a 'pay-per-use' model, he added.

Though encrypting data would reduce security threats but it would eliminate them, he said.

Thatcher nted that it would be important to perform regular risk assessments of an organizations IT infrastructure, which should include an end to end evaluation of how data can be accessed and by whom.

Commenting on WikiLeaks, he said it has become an eye opener for the world to adopt tight security measures in the IT systems.

Thatcher was part of the Microsoft team that held a two-day business strategy conference on "Accelerating Asia Pacific 2010" here.