India IT services industry hits $14 bn as firms step-up Digital Transformation
With more and more domestic companies adopting digital transformation initiatives, the Indian information technology (IT) industry grew 7.2% year-on-year in 2021, higher than the 5.3% rise seen previous year. According to a report by market research firm the International Data Corp. (IDC), the domestic IT services industry was valued at $14.15 billion in 2021.
According to IDC, adoption of new technologies such as cloud platforms, artificial intelligence (AI)-based services, cyber security and modernisation of applications helped the growth of IT services through last year. Going forward, the domestic IT services industry is projected to reach $21.67 billion in valuation by 2026, at an estimated compound annual growth rate (CAGR) of 8.9%.
Harish Krishnakumar, senior market analyst for IT services at IDC India, said enterprises in India increased their IT spends through 2021 to “improve the resiliency and efficiency of their business operations, and enhance customer experience." He added that the adoption of hybrid work models across the industry pushed up IT spends in India.
IDC India has maintained that over the past few quarters a pent-up demand for digital transformation and adoption of new technologies, which were delayed due to the covid-19 pandemic, has been fuelling the growth of IT services in India. It said project-oriented IT services grew the highest, at 7.9% year-on-year, among domestic IT services.
“IT services providers continued to build capabilities on digital technologies through solution and 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 of enterprise solutions at IDC India.
This growth growth was reflected in the Q4 FY22 results of HCL Technologies, released earlier this month. HCL Tech said revenue from its IT and business services rose to $2.199 billion last quarter.