According to International Data Corporation’s (IDC) Worldwide Semiannual Services Tracker, the Indian IT & Business Services market was valued at US$7.14 billion in 1H2023 and recorded a 6.3% year-over-year (YoY) growth as compared to 7.4% in 1H2022. The slowing in growth rate is due to the restraint in IT spending among Indian enterprises brought by macroeconomic headwinds.
“Indian enterprises invested in critical IT projects to gain quicker time to value in their key focus areas like enhancing customer experience, cybersecurity, and optimization of IT infrastructure and operations. Despite being cautious with IT services investments in the near term due to macroeconomic headwinds, Indian enterprises’ investments in the upcoming years will be fuelled by cloud, cybersecurity, and emerging technologies like Generative AI and 5G.” said Harish Krishnakumar, Senior Market Analyst, IT Services, IDC India.
Within the IT & Business Services market, IT Services contributed 78.9% and grew by 6.7% in 1H2023 compared to the 8.1% growth in 1H2022. The IT & Business Services market is projected to grow at a CAGR of 7.2% between 2022-2027 and reach US$ 19.59 billion by the end of 2027.
IDC classifies the IT & Business Services market into three primary markets – Project-Oriented, Managed Services, and Support Services. For 1H2023, project-oriented services registered the highest growth rate at 6.9%, followed by managed services at 6.0%, and support services at 5.3% respectively.
The sustained growth in hosted application management and infrastructure services highlights a growing preference among enterprises for transferring their workloads to datacenters and public clouds managed by service providers. An increase in demand for system integration services is driven by enterprises’ ongoing focus on technologies such as hybrid cloud, AI/ML, analytics, and enhancing their cybersecurity measures.
“Indian organizations are strategically forging partnerships with third-party IT vendors to optimize the agility and efficiency of their infrastructure and application cloud management. They are also enthusiastically embracing the integration of AI and Generative AI into their operational frameworks to enhance efficiency notably in customer experience, code generation, and knowledge management. However, they remain discerning in their approach, prioritizing thorough evaluation of impact and ROI to ensure sustained cautious decision-making.” said Neha Gupta, Senior Research Manager, Software and IT Services Market, IDC India. IDC