India’s IT Services Spending To Rise 9.8% This Year: Gartner

Enterprise spending on IT services in India is on track to total nearly $15 billion in 2019. This is an increase of 9.8% from 2018, according to Gartner. Spending on BPO is forecast to achieve the highest growth in 2019, at 14.4% year over year.

In 2019, end-user spending on IT services in India will represent 59% of total end-user spending on IT services in emerging Asia/Pacific, and it is on track to reach 60% in 2020.

“High GDP growth rates are driving local organisations to increase their investment in infrastructure, applications and digital initiatives, which are increasingly moving to the cloud. Nontraditional sectors, such as logistics and transportation and manufacturing, are also experiencing healthy growth rates, and their business models are centered on investments in IT,” said Arup Roy, research vice president at Gartner.

BPO is the segment where Indian end-user organizations will increase their IT services spending the most in 2019. End-user spending on BPO is on course to reach $1.7 billion in 2019, and is forecast to reach $1.9 billion in 2020.

Crowd-sourcing, Home Working/Teleworking and the “Gig Economy” Are on the Rise

Gartner analysts expect that crowd-sourcing, working at home  or teleworking, and the “gig economy” will account for 40% of the customer management (CM) BPO workforce by 2021, up from 7% in 2017. By 2021, it will account for an estimated 900,000 people.

“Nearly two-thirds of the workforce will be employed by CM BPO service providers, while the rest will be employed by end-user companies directly,” said Roy. “A key benefit of crowd-sourcing, teleworking and the gig economy is access to specialized talent that may not all reside in the same area or that may be unwilling to commute to a central location to work.”

In addition, this model helps mitigate some other business risks, by, for example, providing clear benefits from a business continuity perspective and helping attract buyers from a corporate social responsibility perspective.

Managed Services and Cloud Infrastructure Services Continues to Grow

In 2019, managed services and cloud infrastructure services remains the biggest segment in terms of spending on IT services in India, accounting for close to $6 billion. The segment represents 40% of the end-user spending on IT services in India.

“We have identified a shift in how organisations adopt cloud technologies,” said Roy. “Organizations in India are increasingly looking to acquire not only cloud infrastructure as a service (IaaS) resources themselves, but also the automated management of those resources, management tools delivered as services, and cloud software infrastructure services.”

As a result, Gartner analysts expect that, while IaaS-only cloud providers will continue to exist, they will become increasingly niche due to the breadth and depth of service offerings that end-user organizations require.