Indian IT Market Grows by 6.6% in 2023
The Indian domestic IT & Business Services market has shown resilience, growing by 6.6% in 2023 to reach USD 14.5 billion, according to the latest data from the International Data Corporation (IDC). This growth rate is slightly down from 7.4% in 2022, reflecting a cautious approach by Indian enterprises towards IT spending amidst volatile economic conditions.
Key Insights from IDC Experts
Harish Krishnakumar, Senior Market Analyst for IT Services at IDC India, explained that Indian enterprises focused on cost optimization while prioritizing IT projects with quicker returns. He noted that investments were made in enhancing customer experience and improving operational efficiency using technologies like cloud, analytics, and AI/ML.
Looking ahead, Krishnakumar mentioned that IT service investments will be driven by interest in GenAI, with enterprises engaging IT service providers to develop potential use cases and manage complex IT infrastructure.
Market Segments and Growth
The IT services sector, which makes up 78.4% of the total market, grew by 6.6% in 2023, down from 8.1% in 2022. IDC projects a compound annual growth rate (CAGR) of 7.3% from 2023 to 2028, reaching USD 20.7 billion by the end of the period.
| Segment | Growth Rate in 2023 |
|---|---|
| Project-oriented services | 6.8% |
| Managed services | 5.8% |
| Support services | 5.2% |
The Managed Services segment saw strong demand for Hosting Infrastructure Services and Hosted Application Management, driven by the rising adoption of cloud services. Digital transformation initiatives and the demand for emerging technologies also fueled growth in system integration services.
Industry Dynamics
Neha Gupta, Senior Research Manager for Software and IT Services Market at IDC India, highlighted the dynamic nature of the industry, driven by AI and GenAI. Enterprises are rigorously examining use cases to ensure measurable business outcomes and seek consultative-led approaches from IT service providers.
Gupta noted that digital execution has become a priority for CEOs, who are increasingly involved in digital technology decision-making. Vendors must demonstrate their ability to overcome challenges and deliver next-generation, comprehensive solutions.
