Indian IT services market grows 7.3% in H1 2021: IDC report


The Indian IT services market grew 7.3% in the first half of 2021 compared to a growth of 5.7% in the same period of last year, according to the findings of the latest IDC report.

The IT and business services market will witness an increased momentum in the upcoming cycles due to the revival of the economy and continued increased spending in areas like cloud, security, and artificial intelligence. The IT and business services market is projected to reach $19.93 billion by the end of 2025, growing at a CAGR of 8.2% between 2020-25.

IDC classifies the IT and business services market into three primary markets – project-oriented, managed services, and support services. For the first half of 2021, project-oriented services registered the highest growth rate at 7.2%, followed by managed services at 6.2%, and support services at 5.3%.

The Indian IT and business services market was valued at $6.96 billion and recorded a 6.4% year-on-year growth during January-June, 2021 compared to 5.1% in the same period last year. The increase in growth rate was primarily due to the continued focus on digital transformation initiatives by enterprises in the country.

“Despite the harsh second wave of the covid-19 pandemic, enterprises continued to invest in digital transformation initiatives to address the change in business models, streamline operations, enhance customer and employee experience, and improve overall resiliency. Verticals like government and manufacturing, which delayed IT investments in 2020, hiked up their IT spend in H1 2021, and enterprises in the country continued to increasingly depend on IT service providers for solutions in areas like cloud, security, artificial intelligence, analytics, etc.,” said Harish Krishnakumar, senior market analyst, IT Services, IDC India.

In H1 2021, hosted application management and hosted infrastructure services continued to record the highest growth rates as many enterprises continued to migrate their applications to the cloud. Offerings like system integration and network consulting integration also witnessed an increased demand, as enterprises ramped up their investments in application modernization and network transformation initiatives during this cycle.

“H1 2021 turned out to be the year that showcased enterprise resiliency strengthen at a remarkable pace. Most enterprises witnessed a bounce back with business reaching the pre-pandemic situation. While large enterprises continued to take long strides towards transformation initiatives, the mid-market segment adopted a cautious approach towards technology investments with a focus on investments that provided quick returns in the form of customer acquisition, talent retention or financial returns,” said Shweta Baidya, senior research manager, Enterprise Software and ICT Services, IDC India.

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