Indian IT, business services market grew 7.4% in first half of 2022: Study

India’s IT and business services market grew 7.4 per cent in the first half of 2022, compared to 6.4 per cent in the same period a year ago and helped by enterprises investing in digital transformation, said a report on Tuesday.

The IT and business services market in the country was valued at $7.15 billion between January and June 2022, according to International Data Corporation (IDC). IT services grew even higher at 8.1 per cent in the first half of 2022 compared to 7.3 per cent in the first half of 2021.

The IT and business services market will grow strongly as enterprises continue with their digital transformation investments and it will not face considerable impact due to any economic slowdown, according to IDC.

“Despite the ongoing global economic crisis and the Russia-Ukraine conflict, the Indian IT services market recorded robust growth as enterprises continued to increase their IT service investments to improve resiliency, increase customer satisfaction, accelerate product development, etc,” said Harish Krishnakumar, senior market analyst, IT Services, IDC India.

The IT and business services market will grow at a compound annual growth rate (CAGR) of 8.3 per cent between 2021 and 2026, reaching $ 20.5 billion valuation by the end of 2026, according to IDC’s Worldwide Semi-annual Services Tracker.

“Apart from digital transformation initiatives, there is also a rise in discretionary spending, as IT investments put on hold due to the pandemic have resumed. With investments in the cloud continuing to rise, enterprises also continue investing in data analytics and AI/ML for better decision-making and IT security to improve their overall security posture,” Krishnakumar said.

IDC classifies the IT and business services market into three primary markets: project-oriented, managed services, and support. For the first half of 2022, project-oriented services registered the highest growth rate at 8.1 per cent, followed by managed services at 7.3 per cent, and support services at 6.0 per cent.

“Traditional organizational boundaries are getting blurred with organizations adopting advanced technologies for seamless experiences and resiliency. Organizations are transforming their operating models to keep up with the changing business landscape and as a result demand for IT services is like never before,” said Neha Gupta, senior research manager, Software and IT Services Market, IDC India.

Gupta added that more than 60 per cent of Indian organisations plan to increase budgets across all business and IT services.