India's IT & Business Services Market Grows Moderately In 2023, the Indian domestic IT & Business Services market was valued at $14.5 billion and recorded a 6.1 per cent year-over-year (YoY) growth as compared to 7.4 per cent in 2022
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The Indian domestic IT & Business Services market has recorded a moderate growth rate due to Indian enterprises remaining cautious of their IT spending on the back of volatile macroeconomic conditions. In 2023, the Indian domestic IT & Business Services market was valued at $14.5 billion and recorded a 6.1 per cent year-over-year (YoY) growth as compared to 7.4 per cent in 2022, according to International Data Corporation's (IDC) Worldwide Semi-annual Services Tracker.
"Indian enterprises focused on cost optimization while prioritizing IT projects with quicker returns. Enterprises continued to invest in areas like enhancing customer experience and improving operational efficiency to gain a competitive advantage by leveraging technologies like cloud, analytics, and AI/ML. In the coming years, IT service investments will be driven by interest in GenAI. Enterprises will continue engaging with IT service providers to develop potential use cases and POCs and also to transform and manage their complex IT infrastructure and applications," said Harish Krishnakumar, senior market analyst, IT Services, IDC India.
Of the IT & Business Services market, the IT Services market contributed 78.4 per cent and grew by 6.6 per cent in 2023 compared to the 8.1 per cent growth in 2022. The IT & Business Services market is projected to grow at a CAGR of 7.3 per cent between 2023-2028 and reach US$ 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 per cent, followed by managed services at 5.8 per cent and support services at 5.2 per cent, 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 data centers 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.
