25 Nov 2020

India IT Services Market Grows by 5.9% YoY in 1H20 with Service Providers Playing a Vital Role in Facilitating Transformation, IDC India Reports

NEW DELHI, November 25, 2020 – The India IT & Business Services market grew by 5.3% YoY in 1H20 (January-June 2020), as compared to the 8.9% growth in 1H2019, according to the International Data Corporation’s (IDCWorldwide Semiannual Services Tracker - 1H20. IDC forecasts that the IT & Business Services market is expected to grow annually by 5.4% to reach US$13 billion by December 2020.

Of the IT & Business Services market, the IT Services market contributed 77.4% in 1H20 and grew by 5.9% year-over-year (YoY) in 1H20 compared to the 9.3% growth in 1H2019. Further, as per IDC, the IT Services market will begin picking up momentum gradually from 2021 onwards and is projected to grow at a CAGR of 7.2% between 2019-2024, to be valued at US$13.4 billion by the end of 2024. This reduced rate of growth in the IT Services market in India is due to the COVID-19 pandemic.

IDC classifies the IT Services market into three primary markets – Project-Oriented, Managed Services, and Support Services. For 1H20, project-oriented services registered the highest growth followed by managed services and support services, respectively.

During 1H20, application hosting services and infrastructure hosting services continued to be higher growth markets on account of increasing adoption of cloud applications (majorly collaboration applications and videoconferencing) and cloud infrastructure. Owing to increased demand for VPN licenses and requirement for higher network connectivity, network services witnessed higher adoption.

"In 1H20, the role of IT Services vendors gained higher prominence, as organizations increasingly approached them to help ensure business continuity by putting in place various technologies, solutions, best practices and frameworks. During these difficult times, organizations were investing higher in collaboration applications, VPN licenses, endpoint devices, cybersecurity solutions, cloud, AI, and automation. Apart from just ensuring business continuity, the role of IT service providers have also been towards helping organizations to achieve a higher degree of tech resilience, adaptability, and DX maturity, to become future-ready. Additionally, most leading IT Service vendors have launched innovative AI based applications to help the government and healthcare sectors to provide citizen services and answer COVID-19 related queries, and for organizations to ensure the safe and secure return of their employees to the workplace,” said Garima Goenka, Market Analyst, IT Services, IDC India.

"Enterprises strongly felt the need for advisory and support services to propel their digital journey amidst the pandemic. As a result, IT service providers witnessed a strong surge in demand for various services such as systems and network management, IT Consulting, hosting application management and hosting infrastructure services, among others. IT investments across all the major sectors such as BFSI, healthcare, telecom, IT/ITeS, government and manufacturing increased considerably to improve overall experience and maintain business continuity and resiliency. The government also relaxed some of the stringent guidelines that IT sector had to adhere to, prior to COVID-19. The new rules provide increased flexibility with respect to work from home/ anywhere policies and has also modified some of the existing guidelines to augment the growth in the sector," said Shweta Baidya, Senior Research Manager, Enterprise Software and ICT Services, IDC India.

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

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