IT Services To Grow 10.8% During 2014-19

by CXOtoday News Desk    Jun 25, 2015

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The Indian IT Services market grew 7.1% year-on-year to reach Rs 470708.13 million ($7719 million) in 2014. During second half of 2014, compared to same period last year, the market saw slight uptick primarily on the back of higher demand for hosted infrastructure, hosted applications services, custom application development, IT consulting, and application management services. Besides this, there was a renewed focus on infrastructure projects.

The growth will continue to accelerate as IDC expects India’s IT Services market to grow at a CAGR of 10.8% between 2014 and 2019.

In near term services market growth will be driven by license awards for Payment Banks and Small Scale Banks, and government’s pro-technology stance such as Digital India, mobile based delivery of citizen services, focus on financial inclusion, spend towards smart cities.

Growth will also be driven by burgeoning start-up community and sustained investments across 3rd platform technologies, including mobile, social, cloud and analytics among others.

Vivek Gautam, Research Manager, IT Services & Software IDC India said, “The expanding start up community and increasing technology adoption by SMEs, who favour OPEX as against CAPEX model of IT, is creating healthy demand for hosted infrastructure, hosted application, managed and datacentre services. The market for these services will continue to grow at rapid pace over next few years.”

The Indian IT services market remains primarily driven by project-oriented services like systems integration, network consulting and integration, custom application development and IT consulting. When considered together, these services grew year-on-year by 7% (in INR) during H2 2014. The total IT outsourcing services market grew at 6.8% during the same period while support & training services grew at 6.5%.

Among various verticals BFSI and Retail fared better. Within the BFSI vertical new banking licenses awarded by RBI, increasing technology adoption by Non-Banking Financial Companies (NBFCs) and microfinance institutions pushed the demand for IT services. While in Retail vertical emergence of e-commerce continues to be a key growth driver.

The new age e-commerce players are not only making technology investments themselves but also are forcing traditional brick and mortar players to embrace technology at wider scale. Some of the other verticals such as Healthcare, Services and Government continued to see healthy demand for IT services. 

“Indian organizations are increasingly looking at technology as a key business enabler, a means to improve supplier or customer engagement and gain better business oversight. Many of them are spending more on technology including social, mobile, analytics and cloud (SMAC) for the same reasons.

For instance today Indian enterprises, across industries, are investing in custom mobile applications for services delivery, managing field workforce, launching targeted marketing campaigns and so on. Many are even integrating applications with backend data for deeper analytics,” added Gautam.