In the first half of 2023, India’s IT and Business Services market demonstrated resilience, reaching a valuation of $7.14 billion, according to the latest report from the Worldwide Semi-annual Services Tracker, International Data Corporation (IDC). Despite facing economic hurdles, the market posted a 6.3% year-over-year (YoY) growth, slightly down from the 7.4% recorded in the same period last year.
According to Harish Krishnakumar, Senior Market Analyst, IT Services at IDC India, the slowdown in growth is ascribed to Indian businesses adopting a conservative strategy, which reflects a reduction in IT expenditure as a result of current macroeconomic challenges. Despite this short-term caution, businesses invested heavily in crucial IT projects to improve customer experience, strengthen cybersecurity, and optimize IT infrastructure and operations.
India’s IT & Business Services Market Breakdown in 1H2023
IT Services accounted for 78.9% of the market for IT and Business Services, and during the first half of 2023, they grew by 6.7%, a little less than the 8.1% rise during the same period in 2022. The market is anticipated to expand between 2022 and 2027 at a Compound Annual Growth Rate (CAGR) of 7.2%, with the goal of reaching a significant $19.59 billion by the conclusion of that year.
However, Project-Oriented, Managed Services, and Support Services are the three main sectors into which IDC divides the IT & Business Services industry. Project-oriented services showed the greatest growth rate in the first half of 2023, at 6.9%, followed by managed services at 6.0% and support services at 5.3%. This suggests that the sector’s growth trend is diverse.
Additionally, there is a rising trend of integrating AI and Generative AI into operational frameworks to boost efficiency in customer experience, code generation, and knowledge management.
India’s IT & Business Services Market Future Projection
Krishnakumar predicts that future investments in the country’s IT and business services sector will be fueled by cloud, cybersecurity, and emerging technologies like Generative AI and 5G. Indian enterprises, according to him, are strategically positioning themselves for the long term, prioritizing key focus areas for sustained growth.
Neha Gupta, Senior Research Manager, Software and IT Services Market, IDC India, highlighted that while organizations are embracing these technological advancements, they remain discerning, prioritizing thorough evaluations to ensure sustained cautious decision-making.
“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.
