According to Worldwide Semi-annual Services Tracker report by International Data Corporation (IDC), the Indian domestic information technology (IT) and business services market was valued at $14.5 billion in 2023 and recorded a 6.1 per cent year-over-year (YoY) growth as compared to 7.4 per cent in 2022. The moderation in growth rate is due to Indian enterprises remaining cautious of their IT spending due to volatile macroeconomic conditions.
The report highlighted that the IT services market contributed 78.4 per cent and grew by 6.6 per cent in 2023 compared to the 8.1 per cent growth in 2022. In addition, the IT and business services market is projected to grow at a compounded annual growth rate (CAGR) of 7.3 per cent between 2023-2028 and reach $ 20.7 billion by the end of 2028.
The report stated that it has classified the IT and business services market into three primary markets, project-oriented, managed services, and support services. For 2023, project-oriented services registered the highest growth rate at 6.8 per cent, followed by managed services at 5.8 per cent and support services at 5.2 per cent, respectively.
As per the report, the managed services segment remains driven by hosting infrastructure services and hosted application management as enterprises continue to deploy their workloads in service provider owned datacentres and due to the demand for managed cloud services due to rising cloud adoption. Further, the system integration services reported strong growth driven by digital transformation (DX) initiatives and demand for emerging technologies.
Commenting on the report, Harish Krishnakumar, senior market analyst, IT services, IDC India, said, “Indian enterprises focused on cost optimisation while prioritising IT projects with quicker returns. Enterprises continued to invest in areas like enhancing customer experience and improving operational efficiency to gain a competitive advantage by leveraging technologies like cloud, analytics, and artificial intelligence (AI)/machine learning (ML). In the coming years, IT service investments will be driven by interest in generative AI (GenAI). Enterprises will continue engaging with IT service providers to develop potential use cases and proof of concepts (POCs) and to transform and manage their complex IT infrastructure and applications.”
Meanwhile, Neha Gupta, senior research manager, software and IT services market, IDC India, said, “The industry today is incredibly dynamic, driven by the advent of AI and GenAI, prompting enterprises to rigorously examine use cases to ensure the delivery of measurable business outcomes. As they navigate this landscape, they seek consultative-led approaches and tailored solutions from their IT service providers. Digital execution has ascended to a C-suite imperative, with chief executive officers (CEOs) becoming increasingly hands-on in digital technology decision-making. In this context, vendors must showcase their ability to overcome challenges and fulfil the value propositions sought by enterprises, positioning themselves as providers of next-generation, comprehensive, and impactful solutions.”
