Indian IT & Business Services Market Records 7.4% YoY Growth in 2022

The Indian domestic IT & Business Services market achieved a valuation of USD 13.87 billion in 2022, experiencing a 7.4% year-over-year (YoY) growth, as reported by the International Data Corporation (IDC) Worldwide Semi-annual Services Tracker. This growth rate exceeded the 7.2% recorded in 2021, driven by the digital transformation initiatives undertaken by Indian enterprises.

Despite macroeconomic uncertainties like the war in Ukraine, high-interest rates, and inflation, the Indian IT services market demonstrated resilience. Enterprises continued to invest in digital transformation to enhance customer experience, improve operational efficiency, and increase agility. Key technology areas of investment included cloud computing, analytics, artificial intelligence/machine learning (AI/ML), and security, which are expected to remain crucial in the coming years.

Harish Krishnakumar, Senior Market Analyst, IT Services, IDC India, stated that factors such as an impending recession and high inflation are not anticipated to significantly impact the Indian IT services market in the near term. However, certain segments may experience a slight slowdown due to reduced discretionary spending and delayed decision-making.

The IT Services market contributed 78.1% to the overall IT & Business Services market and achieved an 8.1% growth in 2022, surpassing the 7.9% growth of the previous year. IDC forecasts a compound annual growth rate (CAGR) of 8.0% for the IT & Business Services market between 2022 and 2027, reaching USD 20.42 billion by the end of 2027.

IDC classifies the IT & Business Services market into three primary segments: Project-Oriented, Managed Services, and Support Services. In 2022, project-oriented services exhibited the highest growth rate at 8.0%, followed by managed services at 7.2%, and support services at 6.4%.

The demand for hosted application management and hosted infrastructure services remained robust, as enterprises continued to engage IT service providers for managed cloud services and hosting solutions. Additionally, there was an increased focus on network consulting and integration services, enabling accelerated network transformation through the adoption of more efficient networking technologies. The system integration segment experienced growth driven by increased adoption of cloud computing, AI/ML, analytics, and other advanced technologies.

Neha Gupta, Senior Research Manager, Software and IT Services Market, IDC India, emphasized the impact of inflation on IT spending and the growing emphasis on investment optimization to achieve optimal returns. She predicted a substantial rise in the adoption of cloud services, facilitated by agile and scalable pricing models such as consumption-based and outcome-based pricing structures. The Indian market is expected to witness significant traction in cloud service adoption as organizations strive to efficiently manage their hybrid infrastructures.

The growth of the Indian IT & Business Services market signifies the ongoing digital transformation journey undertaken by Indian enterprises, leading to enhanced operational capabilities and improved customer experiences.