India’s IT Services Market Grows by 6.6% in 2023 as Enterprises Focus on Critical Projects: IDC

• 24 Jun 2024
• TM Team
• 0 Comments

In 2023, the Indian domestic IT & Business Services market was valued at $14.5 billion and recorded a 6.1% year-over-year (YoY) growth as compared to 7.4% in 2022, according to International Data Corporation's (IDC) Worldwide Semi-annual Services Tracker. The moderation in growth rate is due to Indian enterprises remaining cautious of their IT spending due to volatile macroeconomic conditions.

“Indian enterprises focused on cost optimization while prioritizing 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 AI/ML. In the coming years, IT service investments will be driven by interest in GenAI. Enterprises will continue engaging with IT service providers to develop potential use cases and POCs and also to transform and manage their complex IT infrastructure and applications,” said Harish Krishnakumar, Senior Market Analyst, IT Services, IDC India.

Of the IT & Business Services market, the IT Services market contributed 78.4% and grew by 6.6% in 2023 compared to the 8.1% growth in 2022. The IT & Business Services market is projected to grow at a CAGR of 7.3% between 2023-2028 and reach US$ 20.7 billion by the end of 2028.

IDC classifies the IT & 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%, followed by managed services at 5.8% and support services at 5.2%, respectively.

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 datacenters and due to the demand for managed cloud services due to rising cloud adoption. The system integration services also reported strong growth driven by DX initiatives and demand for emerging technologies.

“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 CEOs becoming increasingly hands-on in digital technology decision-making. In this context, vendors must showcase their ability to overcome challenges and fulfill the value propositions sought by enterprises, positioning themselves as providers of next-generation, comprehensive, and impactful solutions." said Neha Gupta, Senior Research Manager, Software and IT Services Market, IDC India.