India’s Domestic IT Services Market Grows At Over 8% In 2022

Despite economic headwinds, Indian Domestic IT Services Market grew by 8.1 per cent in 2022 as enterprises continued investing in Digital Transformation.

IDC reported that the Indian domestic IT and Business Services market was valued at USD 13.87 billion in 2022 and recorded a 7.4 per cent year-over-year (YoY) growth as compared to 7.2 per cent in 2021.

From the total IT & Business Services market, the IT Services market contributed 78.1 per cent and grew by 8.1 per cent in 2022 compared to the 7.9 per cent growth in 2021.

IT & Business Services market is projected to grow at a CAGR of 8.0 per cent between 2022-2027 and reach USD 20.42 billion by the end of 2027, according to the report.

“The Indian IT services market remained resilient, with enterprises investing in digital transformation amidst macroeconomic uncertainties like the war in Ukraine, high-interest rates, inflation, etc. Cloud, analytics, AI/ML, and security continued to be key technology investment areas as enterprises focused on enhancing customer experience, improving operational efficiency and agility, etc., and will continue to do so in the upcoming years,” said Krishnakumar, Senior Market Analyst, IT Services, IDC India.

Contrary to the dominant perception of global headwinds affecting domestic Indian IT market as well, Krishnakumar said these factors are not expected to cause significant impact on the Indian IT services market in the near term. But he added that there will be a slight slowdown due to cutbacks in discretionary spending, delayed decision-making and more, in some segments.

In 2022, hosted application management and hosted infrastructure services witnessed higher growth as many enterprises continued engaging with IT service providers for managed cloud services and increasingly availing hosting services.

Additionally, there was an increased demand for network consulting and integration services as enterprises focused on accelerating network transformation by upgrading to more efficient networking technologies. Growth in the system integration segment was driven by the increased adoption of technologies like cloud, AI/ML, analytics, etc.

“As organisations seek to efficiently manage their hybrid infrastructures, we foresee a substantial increase in the adoption of cloud services, fueled by the benefits of agile and scalable pricing structures like consumption-based and outcome-based pricing models," said Neha Gupta, Senior Research Manager, Software and IT Services Market, IDC India.