The Indian domestic IT & Business Services market has shown resilience in the face of economic uncertainty, growing by 6.6 percent in 2023, as per the International Data Corporation (IDC). Valued at USD 14.5 billion, the market saw a year-over-year growth rate of 6.1 percent, slightly down from the previous year’s rate of 7.4 percent. This moderated growth reflects a cautious approach by Indian enterprises towards IT spending amidst volatile macroeconomic conditions. Enterprises focused on cost optimization while prioritizing IT projects with quicker returns. Investments were made in enhancing customer experience and improving operational efficiency by leveraging technologies like cloud, analytics, and AI/ML.
According to Harish Krishnakumar, Senior Market Analyst for IT Services at IDC India, IT service investments will be driven by interest in GenAI in the coming years. Enterprises will engage with IT service providers to develop potential use cases and proof of concepts, as well as transform and manage their complex IT infrastructure and applications. The IT services sector, which makes up 78.4 percent of the total market, grew by 6.6 percent in 2023, slightly lower than the 8.1 percent growth in 2022. IDC projects that the IT & business services market will grow at a compound annual growth rate (CAGR) of 7.3 percent from 2023 to 2028, reaching USD 20.7 billion by the end of the period.
The IT & business services market is categorized into project-oriented services, managed services, and support services. In 2023, project-oriented services saw the highest growth rate at 6.8 percent, followed by managed services at 5.8 percent, and support services at 5.2 percent. The Managed Services segment has been boosted by the demand for Hosting Infrastructure Services and Hosted Application Management as enterprises deploy their workloads in service provider-owned data centers. The increasing adoption of cloud services has also driven demand for managed cloud services. System integration services have seen strong growth due to digital transformation initiatives and the rising demand for emerging technologies.
Neha Gupta, Senior Research Manager for Software and IT Services Market at IDC India, emphasized the evolving industry landscape driven by AI and GenAI. Enterprises are rigorously examining use cases to ensure the delivery of measurable business outcomes. With CEOs becoming more involved in digital technology decision-making, vendors need to demonstrate their ability to overcome challenges and fulfill the value propositions sought by enterprises. They must position themselves as providers of next-generation, comprehensive, and impactful solutions. As the industry continues to evolve, consultative-led approaches and tailored solutions from IT service providers are becoming increasingly important to meet the changing needs of enterprises.
