India IT Services Market Grows by 7.3% in 1H2021 with Indian Enterprises Continuing to Invest in Digital Transformation Amidst the Second Wave, IDC Reports

The Indian IT & Business Services market was valued at USD 6.96 Billion and recorded a 6.4% year-over-year (YoY) growth In 1H2021 (Jan-Jun) compared to 5.1% in 1H2020, according to the International Data Corporation’s (IDC) Worldwide Semiannual Services Tracker . The increase in growth rate was primarily due to the continued focus on digital transformation initiatives by enterprises in the country.

“Despite the harsh second wave of the COVID-19 pandemic, enterprises continued to invest in digital transformation initiatives to address the change in business models, streamline operations, enhance customer and employee experience, and improve overall resiliency. Verticals like government and manufacturing, which delayed IT investments in 2020, hiked up their IT spend in 1H2021, and enterprises in the country continued to increasingly depend on IT service providers for solutions in areas like cloud, security, artificial intelligence, analytics, etc. With the vaccination drive picking up pace, the overall economy and consumer demand are expected to bounce back to pre-COVID levels, thus driving the Indian IT services market in the upcoming months,” said Harish Krishnakumar, Senior Market Analyst, IT Services, IDC India.

Of the IT & Business Services market, the IT Services market contributed 78% and grew by 7.3% in 1H2021 compared to the 5.7% growth in 1H2020. Further, as per IDC, the IT & Business Services market will witness an increased momentum in the upcoming cycles due to the revival of the economy and continued increased spending in areas like cloud, security, artificial intelligence, etc. The IT & Business Services market is projected to reach US$19.93 billion by the end of 2025, growing at a CAGR of 8.2% between 2020-2025.

IDC classifies the IT & Business Services market into three primary markets – Project-Oriented, Managed Services, and Support Services. For 1H2021, project-oriented services registered the highest growth rate at 7.2%, followed by managed services at 6.2%, and support services at 5.3%, respectively.

In 1H2021, hosted application management and hosted infrastructure services continued to record the highest growth rates as many enterprises continued to migrate their applications to the cloud. Offerings like system integration and network consulting integration also witnessed an increased demand, as enterprises ramped up their investments in application modernization and network transformation initiatives during this cycle.

“1H2021 turned out to be the year that showcased enterprise resiliency strengthen at a remarkable pace. Most enterprises witnessed a bounce back with business reaching the pre-pandemic situation. While large enterprises continued to take long strides towards transformation initiatives, the mid-market segment adopted a cautious approach towards technology investments; with a focus on investments that provided quick returns in the form of customer acquisition, talent retention or financial returns. Long-term or capital-intensive projects were de-prioritized for some of the SMB organizations. Large enterprises evaluated infrastructure modernization and application transformation projects and engaged with service providers to navigate the journey. Small and medium businesses focused on process automation, customer experience management, and hybrid cloud management during the period,” said Shweta Baidya, Senior Research Manager, Enterprise Software and ICT Services, IDC India.

*All market size and growth percentage numbers are in constant currency.