Services Sector Offers Big Opportunity for Vendors

by CXOtoday Staff    Dec 24, 2009

The domestic IT services market is estimated to grow from $5.7 billion in 2008 to $12.8 billion in 2013, growing at a compounded annual growth rate (CAGR) of 18.6%.

According to a report by IT research firm Springboard Research, the vertical would be heavily dominated by infrastructure services, which are expected to reach $7.2 billion in 2013, while applications services, with a CAGR of 19.6%, would be the fastest growing segment.

"The Indian domestic IT services market is at par with international levels in terms of average gross margin and provides immense opportunity to the vendors," said Sudip Saha, senior research analyst (services) of Springboard Research.

However, to meet high consumer expectations, vendors need to strategies around services delivery by implementing efficient processes, reusable tools and templates and replaceable models, he said.

In terms of industry verticals, banking, financial services and insurance (BFSI) leads the Indian IT services market with 21.5% market share, followed by the public sector (including education) and telecom industry.

However, energy and utilities, followed by healthcare, remains the fastest growing vertical. "With industries such as public sector, healthcare, energy and utilities, and transportation and logistics stepping up their IT spending, the appeal for the Indian domestic market has increased tremendously and is drawing the attention of domestic and MNC IT service providers," said Phil Hassey, vice-president (Services Research) of Springboard Research.

The key challenge remains the disability to convert the potential demand into successful client engagement, said Hassey.