What’s driving growth in India’s IT services market?
INDIA has always been an interesting IT services market. The country produces one of the largest numbers of computer engineers and is one of the biggest exporters of IT talent in the world.
Despite this, the country’s own digital transformation hasn’t been one of the smoothest — especially because companies lacked clarity about future technologies and are often pulled back by legacy technologies that are hard to integrate with new systems and solutions.
However, according to a new IDC forecast, the Indian IT services market is expected to reach US$12.9 billion by the end of this year, up 6.9 percent annually.
It is further expected to register an annual growth rate of 7.9 percent and reach US$13.9 billion by the end of next year.
IT Services, which accounted for around 78 percent of the IT & Business Services spending in the first half of this year, is expected to grow at 6.9 percent year-on-year to reach US$9.9 billion for all of 2018.
IDC’s figures suggest that the Indian economy rebounded in the first half of this year, after a spate of slower growth in 2017 — which led to higher government spending on technology initiatives and higher enterprises spending on digital technologies.
The growth in spending also led to a sustained demand for services, especially around systems upgrades.
A greater positive impact on the IT Services market of this is expected in the next 1-2 years. In fact, IDC believes that the Hosting Infrastructure Services, Hosted Application Management, Application Management, and IT Consulting will be among some of the fastest growing services in the coming months.
IDC classifies the IT Services market into three categories – Project-Oriented Services, Managed Services, and Support Services.
During the first half of this year (January – June 2018), Project-Oriented Services constituted the largest segment, followed by Managed Services, and Support Services.
“The role of IT Services in accelerating the adoption of Third platform technologies is pivotal. The demand for services around emerging technologies, such as cloud, artificial intelligence, machine learning, automation, and the internet of things will be boosted in the next 3-5 years,” said IDC India Director Enterprise Ranganath Sadasiva.
Finally, IDC estimates that the IT Services market will grow at a CAGR of 8.2% between 2017-2022, to reach US$ 13.7 billion by the end of 2022.
At the end of the day, it seems like the inertia in India’s IT services market is beginning to dissipate, allowing for a renewed focus on new and emerging technologies — mostly driven by global competition and market forces.