New Delhi, Nov 25: India's IT and business services market is expected to grow 5.4 per cent annually to reach $13 billion by December this year, research firm IDC said.
The segment grew 5.3 per cent year-on-year (y-o-y) in the January-June (H1) 2020 period as compared to 8.9 per cent growth in H1 2019, IDC said in a report.
Of the IT and business services market, the IT services market contributed 77.4 per cent in H1 2020, growing 5.9 per cent y-o-y as compared to 9.3 per cent growth in the year-ago period.
"The IT services market will begin picking up momentum gradually from 2021 onwards and is projected to grow at a CAGR of 7.2 per cent between 2019-2024, to be valued at $13.4 billion by the end of 2024," it said.
This reduced rate of growth in the IT services market in India is due to the COVID-19 pandemic, IDC added.
"During H1 2020, application hosting services and infrastructure hosting services continued to be higher growth markets on account of increasing adoption of cloud applications (majorly collaboration applications and video-conferencing) and cloud infrastructure," IDC said.
Owing to increased demand for VPN licenses and requirement for higher network connectivity, network services witnessed higher adoption, it added.
"In H1 2020, the role of IT services vendors gained higher prominence, as organisations increasingly approached them to help ensure business continuity by putting in place various technologies, solutions, best practices and frameworks," IDC India Market Analyst, IT Services, Garima Goenka said.
During these difficult times, organisations were investing higher in collaboration applications, VPN licenses, endpoint devices, cybersecurity solutions, cloud, artificial intelligence, and automation.
"Apart from just ensuring business continuity, the role of IT service providers have also been towards helping organisations to achieve a higher degree of tech resilience, adaptability...," she said.
Goenka noted that vendors have launched AI-based applications to help the government and healthcare sectors to provide citizen services and answer COVID-19 related queries, and for organisations to ensure safe and secure return of their employees to the workplace.
"IT investments across all the major sectors such as BFSI, healthcare, telecom, IT/ITeS, government and manufacturing increased considerably to improve overall experience and maintain business continuity and resiliency," IDC India Senior Research Manager, Enterprise Software and ICT Services, Shweta Baidya said.
She added that the government also relaxed some of the stringent guidelines that provided increased flexibility with respect to work from home/anywhere policies.