The IT & Business Services market will begin picking up momentum gradually from 2021 onwards due to increased spending in areas like cloud, application modernization, artificial intelligence, automation, etc.
In 2020, the Indian IT & Business Services market was valued at USD 13.41 Billion and recorded a 5.41% year-over-year (YoY) growth as compared to 8.43% in 2019, according to IDC’s Worldwide Semi-annual Services Tracker. The reduced growth rate is due to the impact of the COVID-19 pandemic on businesses in the country.
Of the IT & Business Services market, the IT Services market contributed 77.06% and grew by 5.97% in 2020 compared to the 8.91% growth in 2019. Further, as per IDC, the IT & Business Services market will begin picking up momentum gradually from 2021 onwards due to increased spending in areas like cloud, application modernization, artificial intelligence, automation, etc. The IT & Business Services market is projected to grow at a CAGR of 7.18% between 2020-2025 and reach USD 18.97 billion by the end of 2025.
“Enterprises across all sectors started investing in digital transformation as the pandemic made it evident that businesses with higher digital adoption would fare better than ones with traditional IT systems. During the second half of 2020, apart from cloud adoption and IT security, enterprises also started to increasingly invest in technologies like artificial intelligence, machine learning, and analytics for solutions like conversational AI and Chatbots, fraud prevention, demand forecasting, etc., which would help streamline their business operations. Even sectors like manufacturing, which was adversely affected during the initial stages of the pandemic, started investing in cloud-based applications and automation projects," said Harish Krishnakumar, Senior Market Analyst, IT Services, IDC India.
IDC classifies the IT & Business Services market into three primary markets – Project-Oriented, Managed Services, and Support Services. For 2020, managed services segment registered the highest growth rate at 6.85%, followed by project-oriented services at 5.92%, and support services at 4.51% respectively.
In 2020, hosted application management and hosted infrastructure services witnessed a higher growth as many enterprises continued to migrate their applications to the cloud. The growth is also attributed to the increase in demand for cloud services driven by the rise in remote working, online classes, and online streaming because of the COVID-19 pandemic.
"While the year 2020 pushed enterprises to focus on survival and business continuity strategies through cost takeout and cost optimization initiatives, the year 2021 will pave the way for business resiliency plans to kick-in and accelerated investments in technologies to support an enterprise's digital goals. Some of the areas where IDC envisions clear opportunities for service providers include cloud enablement and augmentation services, network management, optimization and automation, managed security services, and AI-based services, among others. With a large part of the workforce being out of action during the second wave of the pandemic, enterprises will look up to their service partners to enable digital transformation initiatives and prepare them to be a future-ready enterprise," said Shweta Baidya, Senior Research Manager, Enterprise Software and ICT Services, IDC India.
*All market size and growth percentage numbers are in constant currency.