Introduction
The
domestic IT Services Market is as of now is mostly driven by project-oriented
services like custom application development, systems integration, network
consulting & integration, and IT consulting. A report by International Data
Corp (IDC) predicted that the local IT Services market would grow at a compound
annual growth rate (CAGR) of 10.8% (in Rupee terms) between 2014 and 2019. Among
several verticals, Banking and Financial Services (BBFSI) and Retail, are doing
consistently good. As regards BFSI, awarding of ‘New Bank Licenses’ by RBI and increasing
technology adoption by Non-Banking Financial Companies (NBFCs) & microfinance
institutions, is constantly pushing the demand for IT services. In fact,
another report by ‘Gartner Inc.’ forecasted that India would be the second
largest market for IT by the end of 2018.
Size
The
domestic IT Market of India stood at USD 36 Billion in 2015 and as per various
reports is projected to grow at a CAGR of approx. 14% to USD 67 Billion by
2020, thus becoming the second largest IT Market in the ‘Asia Pacific Region’
by 2018. Further, according to Gartner Inc., “driven by growth in software and
IT services revenue, IT spending in India is forecast to reach $72.4 billion in
2017, up 6.9 % from 2016 estimated spending of $67.7 billion.” According to the
company, the key vertical segments driving IT spending growth include the
communications, media and services, banking & securities, manufacturing and
utilities markets.
Factors of Growth
The
predicted reasons for the growth of the market are manifold including
development of local data centers, exponential in internet penetration backed
by a ‘Digital India’ drive that is expected to attract USD 17 Billion
investment in next 3-4 years, higher demand for hosted applications services,
hosted infrastructure, IT consulting, application management services, and custom
application development. In fact, more than 90% of ‘Small and Medium
Businesses’ are expected to embrace technology, in one way or the other, by
2020 and number IT services provider create Business page. These ‘Small
and Medium Businesses’ prefer OPEX as against CAPEX model of IT, and this
market is expected to grow at a great pace over next few years.
One
other important driver of growth is the emergence of new age E-Commerce companies
that are not only making technology investments themselves, but are also forcing
traditional ‘brick and mortar’ retail players to march on a technology path in
a big way. Indian companies are progressively adopting technology as a means to
improve supplier / customer engagement and gain better business oversight. Moreover,
many companies are spending more on technology, including social, mobile, analytics,
and cloud for these reasons. For example, such companies across industries are
in the ‘investment mode’ in the specific areas of custom mobile applications
for services delivery, managing field workforce, launching targeted marketing
campaigns, amongst others.
Conclusion
The
reasons for the near term growth of the ‘Indian IT Services Market’ include license
awards for Payment Banks and Small Scale Banks, current government’s
pro-technology stance (Digital India, mobile-based delivery of citizen
services, focus on financial inclusion, spend towards smart cities etc.),
burgeoning start-up community and sustained investments across 3rd platform
technologies. In essence, domestic IT Services Market is poised for an
exponential growth and can be a great contributor in the overall job scenario
of the country, and thus overall GDP.
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