Indian IT services market reaches USD $7.4 billion in 2024
The Indian IT Services market experienced a 6.4% year-on-year growth in the first half of 2024, reaching USD $7.4 billion, according to the International Data Corporation (IDC) Worldwide Semi-annual Services Tracker.
This growth represents 79.2% of the overall IT and Business Services market, which itself grew by 5.9% from the previous year. Although this expansion is slightly below the 6.7% growth rate seen in the same period in 2023, investments in digital transformation, cloud migration, and generative artificial intelligence (GenAI) have driven the market forward. Indian enterprises focus on cost optimisation and operational efficiency, underlining their commitment to these IT initiatives despite facing macroeconomic challenges.
The market is projected to grow at a compound annual growth rate (CAGR) of 6.4% between 2023 and 2028, potentially reaching USD $19.8 billion by the end of the period. Although growth is modest due to economic uncertainties, sustained investment in technology-driven business transformation suggests resilience and potential opportunities for the market.
Harish Krishnakumar, Senior Market Analyst for IT Services at IDC India, commented, "Indian enterprises prioritized critical projects in areas like digital transformation, cloud migration, GenAI, cybersecurity, etc., amidst cost optimization initiatives to drive innovation, improve business outcomes, and remain competitive. As the macro-economic environment gradually improves, the resulting rebound in discretionary spending and increased investments in digital transformation are expected to drive IT services investments during the forecast period. Investments in GenAI would likely surge as enterprises try leveraging GenAI for improved decision-making, enhancing customer experience, etc., as well as integrating this into existing business applications, with IT service providers as their prime technology partners for their GenAI plans."
IDC categorises the IT and Business Services market into three segments: Project-Oriented, Managed Services, and Support Services. For the reporting period, project-oriented services led with a growth rate of 6.4%, followed by managed services at 5.6%, and support services at 5.4%. System integration, driven by efforts such as cloud migration and application modernization, plays a crucial role in promoting data engineering and infrastructure modernization as well as facilitating GenAI integration.
Neha Gupta, Senior Research Manager for Software and IT Services Market at IDC India, noted the changing dynamics within the industry. She stated, "The India IT ecosystem stands at a pivotal moment. As investments in AI and GenAI transition from discussions to implementation, the demand for advanced capabilities and elevated expectations from IT service providers is set to reshape the industry. Vendors are integrating AI into their offerings to enhance intelligence and operational efficiency. Consequently, the spotlight is on achieving data efficiency, ensuring robust security, and prioritizing the upskilling and reskilling of talent. The coming 12-18 months promise to bring transformative changes, redefining the trajectory of Indian IT services."
