Digital transformation initiatives and core IT systems modernization by organizations are the key drivers to this growth
According to IDC Asia Pacific Semi-annual Services Tracker, 1H 2017, the India IT & Business Services market is expected to rebound with a year-on-year growth rate of 12.5% and touch USD 12.1 billion by the end of 2017. IT Services that contributed around 78% of the overall services market in 1H 2017 is expected to reach USD 9.3 billion in 2017.
Despite a decline in the country's GDP in 1H 2017, Digital transformation initiatives and core IT systems modernization by organizations in verticals such as banking, manufacturing and telecom added to the growth story of the IT Services market.
IDC classifies the IT Services market into three categories - Outsourcing, Project Oriented and Support and Training. For the 1H 2017 period (January - June 2017). Project Oriented services constituted the largest segment with a share of 38.9%, followed by Outsourcing (37.8%), and Support and Training (23.0%).
"The demand for services such as systems integration and hosting infrastructure was in high demand in 1H 2017 as a significant number of small and medium businesses tuned into the technology requirements stemming out of the Government's GST drive," says Jaimadhav Senapati, Market Analyst - IT Services, IDC India.
Systems Integration continued to lead the Project Oriented services market in 1H 2017. The sustained demand was led by investments in core infrastructure upgrades (e.g. core banking, ERP systems) by larger enterprises across banking, insurance, manufacturing, and telecom industries.
IDC estimates that the IT Services market will advance at a healthy CAGR of 9.6 to reach USD 13.4 billion by the end of 2021.
"Digital Transformation spend will lead the growth in IT Services market over the next 3-4 years. Cloud, Information Management, and Security would be the three pillars of growth for this period, as organizations would leverage such technologies to accomplish their business objectives," says Sandeep Kumar Sharma, Associate Research Manager - Software and Services, IDC India.