India IT Services market to double to $15 Billion by 2014 says Gartner

by p b    Jul 11, 2011

India’s domestic IT services market is expected to double to $ 15 billion by 2014, making it the third largest market in the Asia Pacific region, said Gartner. The local IT services industry will grow to $9.5 billion in 2011, an 18 percent increase over $7.6 billion in 2010. India’s IT services market is quite small when compared with large markets such as the U.S. or the U.K., but it does offer a growth opportunity to service providers because of buoyant market conditions. “India’s domestic IT services is a large emerging market in high growth mode,” said Arup Roy, principal research analyst. “Coupled with other factors such as openness to adopt technology and a maturing sourcing approach, it represents an attractive target potential for providers of all sizes.” Government infrastructure projects will strongly drive IT, in conjunction with the expansion of the financial services and manufacturing subsectors. Currently, only four industry verticals make up the bulk of the market (85 percent of all IT services spending). Those four industries are banking, financial services and insurance; telecommunications; manufacturing; and government. This means that other industry verticals offer a good opportunity of growth as they start opening up and start engaging with external service providers (ESPs). The Indian market is served by many small players with no large and dominant player. “There is still room for new players and a great opportunity for any large credible player to consolidate its position and grab market share in a big way. In the recent past, the cost of labor and infrastructure in Tier 1 cities has been rising, but it still is one of the lowest in the world,” said Roy. The share of local providers and multinational corporation (MNC) providers in India is almost the same — approximately 20 percent. Six of the top 10 providers are Indian (22.3 percent market share) and four are MNC providers (19.7 percent market share). So these two groups of vendors are about equally placed, the statement said. “India’s domestic market presents a high growth opportunity at a good critical mass for a broader group of mainstream global providers and small to mid-size providers to start competing,” said Roy. “Companies who are planning to invest in India to target the domestic market should develop a realistic target of their revenue and growth potential,” he added.