IT services market grew by 8.1% in first half of 2022

In 1H2022 (Jan-Jun), the Indian domestic IT & business services market was valued at USD 7.15 Billion and recorded a 7.4% year-over-year (YoY) growth compared to 6.4% in 1H2021, according to the International Data Corporation ‘s (IDC) Worldwide Semi-annual Services Tracker. The higher growth rate is due to the continuing rise in digital transformation investments among Indian enterprises.

“Despite the ongoing global economic crisis and the Russia-Ukraine conflict, the Indian IT services market recorded robust growth as enterprises continued to increase their IT service investments to improve resiliency, increase customer satisfaction, accelerate product development, etc. Apart from digital transformation initiatives, there is also a rise in discretionary spending, as IT investments put on hold due to the pandemic have resumed. With investments in the cloud continuing to rise, enterprises also continue investing in data analytics and AI/ML for better decision making and IT security to improve their overall security posture,” said Harish Krishnakumar, Senior Market Analyst, IT Services, IDC India.

Of the IT & business services market, the IT Services market contributed 78.5% and grew by 8.1% in 1H2022 compared to the 7.3% growth in 1H2021. Further, as per IDC, the IT & Business Services market is poised to record strong growth in the upcoming years, as enterprises are expected to continue with their digital transformation investments and will not face a considerable impact due to the economic slowdown. The IT & Business Services market is projected to grow at a CAGR of 8.3% between 2021-2026 and reach US$ 20.5 billion by the end of 2026.

IDC classifies the IT & Business Services market into three primary markets – Project-Oriented, Managed Services, and Support Services. For 1H2022, project-oriented services registered the highest growth rate at 8.1%, followed by managed services at 7.3%, and support services at 6.0% respectively.

The managed services market is driven by the increased demand for hosted application management and hosting infrastructure services caused due to the rising adoption of cloud and colocation services. The project-oriented services market is driven by the demand for system integration services, and the demand for IT consulting services is also on the rise as enterprises try to ensure their IT investments are aligned with their desired business outcomes.

“Traditional organizational boundaries are getting blurred with organizations adopting advanced technologies for seamless experiences and resiliency. Organizations are transforming their operating models to keep up with the changing business landscape and as a result demand for IT services is like never before. According to the IDC Future Enterprise Resiliency & Spending Survey Wave 2, March 2022 (India: n=50), more than 60% of Indian organizations plan to increase their budgets across all business and IT services contracted from professional service providers as a service provider can best support their business and IT. We see this trend continuing as Indian enterprises will look up to their service providers as they progress towards their goal of becoming a future enterprise,” said Neha Gupta, Senior Research Manager, Software and IT Services Market, IDC India.

CT Bureau