According to a report by International Data Corporation (IDC), the Indian IT services market grew 6.1 per cent year-over-year (YoY) in 2023, reaching a market size of $ 14.5 billion. While IT investments showed a slower recovery compared to the previous year, the report highlights that digital transformation (DX) initiatives and the increasing complexity of IT environments will continue to drive market growth.
The report highlighted that the leading tech companies capitalised on increased digital spending across enterprises in India, driving significant revenue growth. Performance was bolstered by strong demand in cloud, artificial intelligence (AI), security, and application modernisation, with notable success in the government sector and telecom and manufacturing verticals.
Increasing the use of external professional partners, strengthening the capabilities of internal IT service workforces, and developing new digital businesses will drive the increase in IT service budgets. India-based companies are expected to leverage generative AI (GenAI) for data management, risk management and compliance, and productivity-enhancing use cases.
The report also mentioned that India-based companies prioritised strong analytics, automation, and cognitive enablement capabilities, including GenAI, from their next-generation IT service partners. The GenAI solutions market is experiencing a surge, presenting numerous opportunities for vendors, particularly in productivity-related use cases such as report summarisation, job description generation, and code creation. The market is expected to evolve, initially focusing on business function use cases, where AI models are integrated with enterprise data for specific functions like marketing, sales, service, and procurement. Eventually, enterprises will leverage GenAI for industry-specific use cases that require extensive customisation to address unique industry processes or activities.
Commenting on the report, Neha Gupta, senior research manager, software and IT services market, IDC India, said, “While 2023 saw a slowdown in IT investment, 2024 will be all about growth fuelled by digital transformation (DX). The increasing complexity of IT ecosystems, blending on-premises, private, and multicloud environments, along with surging demand for AI and GenAI solutions, stronger security measures, and automation, will drive the market forward. Service providers are at the heart of this evolution, enabling businesses to manage complex infrastructures, responsibly harness AI, and deliver enhanced customer experiences.”
Gupta added, “In today’s digital business environment, technology vendors must be forward-thinking innovators, utilising technology to create new digital value and keep their customers ahead of the curve.”
