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Biztech Jun 17, 2013

Demand For IT Services Undeterred By Weak IT Investment Environment In 2012: IDC

By Staff

According to IDC's H2 2012 IT Services Tracker data, the demand for IT Services is witnessing a strong growth, even amid weak investment environment. As per IDC data, the Indian IT services market grew 11 percent year-on-year (YOY) to INR 408,335.59 million (USD 7592 million) in calendar year (CY) 2012.

Evolving customer dynamics, changing business requirements and emphasis on improving profit margins have driven Indian organisations to look at IT as a differentiator. Increasingly, Indian organisations are using IT to sharpen their competitive edges and that has in turn led to continued demand for IT services in the market.

IDC India expects that over a period of five years (2012-2017), local IT services market will grow at a CAGR of 13.8 percent (in INR).

"Stiff competition, new regulations and demanding customers are pushing the Indian organisations to think and act differently. Organisations in India have begun to endorse technology to gain advantage over the competition and capture more market share. This has, since, led to an increase in demand for IT services. Services like support and deploy, system integration and discrete outsourcing have grown on the back of infrastructure build out, business automation and technology upgrade projects," said Kavita Bhadauria, Research Manager,IT Services & Software IDC India.

The Indian IT services market is primarily driven by project-oriented services like systems integration, network consulting and integration, custom application development and IT consulting. When considered together, these services grew YOY by 9.9 percent (in INR) in 2012.

Technology upgrade, automation and a number of IT infrastructure and datacentre-related projects were carried out in sectors like telecom, banking and government which contributed to strong demand for project services.

Discrete outsourcing services like hosting application, hosting infrastructure and network management services also witnessed a healthy growth. In CY 2012, the total outsourcing services market in India grew by 12.5 percent YOY (in INR). With the economy growing at a slower rate, a lot of organisations in the country have begun to face pressure to curb costs, move from a CAPEX to OPEX model and improve their time to market. Outsourcing becomes an obvious choice in such a scenario. IDC believes that as the managed services and cloud delivery models gain popularity, more organisations will prefer discrete outsourcing services.

The emerging opportunities in the Indian IT services market are also impacting the service providers landscape. Global technology vendors and indigenous providers are fighting tooth and nail for the bigger share of the Indian IT services pie. The players are investing in building up solutions, scaling vertical capabilities and strengthening partner ecosystem to cater to a broader segment. The demand for social media analytics, cloud services and mobility has also paved the way for a new breed of companies in the Indian market. Several home-grown providers who specialised in these technologies have since entered the market.

Bhadauria said "In the near future the Indian IT services market will go through an interesting phase where the organisations that buy these services will become more demanding and providers will be under pressure to give up the old ways of doing business and take on a new approach. Providers will need to come up with innovative ways for customer acquisition and retention. Moreover the emerging demand of cloud, mobility and Big Data will push the service providers to invest in building up capabilities to deliver these solutions over and above their traditional IT services."

by Staff

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