According to a report by International Data Corporation (IDC), Indian IT Services market grew by 6.4 per cent year-over-year (YoY) in first half (H1) of 2024, contributing 79.2 per cent of the overall IT and business services market.
While this growth marks a slight moderation from 6.7 per cent in H1 2023, it reflects sustained investments in digital transformation, cloud migration, and generative artificial intelligence (GenAI) adoption. Indian enterprises remained committed to critical IT initiatives, prioritising cost optimisation and operational efficiencies to drive competitiveness.
As per the report, broader IT and business services market in India reached $ 7.4 billion in H1 2024, registering a 5.9 per cent YoY growth, compared to 6.2 per cent in H1 2023. The market is projected to expand at a compounded annual growth rate (CAGR) of 6.4 per cent between 2023 and 2028, reaching $ 19.8 billion by the end of the forecast period. Modest overall growth reflects enterprise caution amid macroeconomic uncertainties, though continued investments in IT-led business transformation signal long-term resilience and opportunity.
The report classified IT and business services market into three primary markets namely project-oriented, managed services, and support services. For H1 2024, project-oriented services registered the highest growth rate at 6.4 per cent, followed by managed services at 5.6 per cent and support services at 5.4 per cent, respectively.
Furthermore, it highlighted that system integration segment will be driven by initiatives like cloud migration, application modernisation, integration of emerging technologies, etc., and services around data engineering, infrastructure modernisation, and implementation services to facilitate GenAI adoption. The managed services segment will be driven by the need to efficiently manage enterprise applications and infrastructure across complex distributed IT environments.
Commenting on the report, Harish Krishnakumar, senior market analyst, IT services, IDC India, said, “Indian enterprises prioritised critical projects in areas like digital transformation, cloud migration, GenAI, cybersecurity, etc., amidst cost optimisation initiatives to drive innovation, improve business outcomes, and remain competitive. As the macro-economic environment gradually improves, the resulting rebound in discretionary spending and increased investments in digital transformation are expected to drive IT services investments during the forecast period. Investments in GenAI would likely surge as enterprises try leveraging GenAI for improved decision-making, enhancing customer experience, etc., as well as integrating this into existing business applications, with IT service providers as their prime technology partners for their GenAI plans.”
Meanwhile, Neha Gupta, senior research manager, software and IT services market, IDC India, said, “The India IT ecosystem stands at a pivotal moment. As investments in AI and GenAI transition from discussions to implementation, the demand for advanced capabilities and elevated expectations from IT service providers is set to reshape the industry. Vendors are integrating AI into their offerings to enhance intelligence and operational efficiency. Consequently, the spotlight is on achieving data efficiency, ensuring robust security, and prioritising upskilling and reskilling of talent. The coming 12-18 months promise to bring transformative changes, redefining the trajectory of Indian IT services.”
