Indian domestic IT services market grows by 7.9% in 2021: IDC Reports


In 2021, the Indian domestic IT & Business Services market was valued at USD 14.15 Billion and recorded a 7.2% year-over-year (YoY) growth as compared to 5.3% in 2020, according to the International Data Corporation’s (IDC) Worldwide Semi-annual Services Tracker. The increase in growth rate is due to rise in digital transformation initiatives among enterprises in the country.

“The surge in digital transformation initiatives among Indian enterprises continued in 2021 as enterprises continued to increase their IT investments to improve the resiliency and efficiency of their business operations and enhance customer experience. Cloud, AI/ML, and security continue to be priority investment areas, and businesses also increased their investments in workplace transformation projects due to adoption of hybrid work models. With the economy gradually recovering from the impact of the COVID-19 pandemic, there will be an increase in IT services spending in the upcoming years due to the pent-up demand caused due to the pandemic and also due to rising discretionary IT spending in certain industries,” said Harish Krishnakumar, Senior Market Analyst, IT Services, IDC India.

Of the IT & Business Services market, the IT Services market contributed 77.6% and grew by 7.9% in 2021 compared to the 5.8% growth in 2020. Further, as per IDC, the IT & Business Services market is expected to witness a robust growth in the upcoming years as enterprises continue to invest in areas like cloud, AI/ML, security, application modernization, etc. The IT & Business Services market is projected to grow at a CAGR of 8.9% between 2021-2026 and reach US$ 21.67 billion by the end of 2026.

IDC classifies the IT & Business Services market into three primary markets – Project-Oriented, Managed Services, and Support Services. For 2021, Project-Oriented services registered the highest growth rate at 7.9%, followed by Managed Services at 6.9%, and Support Services at 6.2% respectively.

Hosted application management and hosted infrastructure services continued to witness a higher growth as many enterprises continue to increasingly adopt cloud and hosting services. There was also an increased demand for systems integration services due to initiatives like application modernisation and adoption of emerging technologies like cloud and AI/ML.

“While the year 2020 pushed enterprises to focus on survival and business continuity strategies, Indian enterprises continued investing in IT Services in the year 2021 as they accelerated their digital transformation journey. On the other hand, IT services providers continued to build capabilities on digital technologies through solution/platform centric approaches. Areas like cloud and security continued to see momentum along with automation and AI. We see this trend continuing as Indian enterprises will look up to their service providers as they progress towards their goal of becoming a future-enterprise,” said Sharath Srinivasamurthy, Research Director, Enterprise Solutions & ICT Practices, IDC India.


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