India's IT & Business Services Market Projected to Reach $20.7 Billion by 2028
The IT and business services market in India is set for remarkable growth, with projections indicating it will reach $20.7 billion by the end of 2028. This expansion represents a compound annual growth rate (CAGR) of 7.3 percent, according to a recent report by the International Data Corporation (IDC).
Current Market Overview
As of last year, the domestic IT & business services market was valued at $14.5 billion, reflecting a year-over-year (YoY) growth of 6.1 percent. This is a slight decline from the 7.4 percent growth observed in 2022. The moderation in the growth rate is attributed to cautious IT spending by Indian enterprises amid volatile macroeconomic conditions.
Strategic Focus Areas
Despite the cautious spending, Indian enterprises continue to prioritize investments in enhancing customer experience and improving operational efficiency. These companies leverage cutting-edge technologies such as cloud computing, analytics, and artificial intelligence/machine learning (AI/ML) to gain a competitive edge.
Harish Krishnakumar, Senior Market Analyst at IDC India, emphasizes the role of generative AI (GenAI) in driving future IT service investments. Enterprises are expected to engage IT service providers to develop potential use cases, proof of concepts (POCs), and to transform and manage their complex IT infrastructures and applications.
IT Services Market Contribution
Within the broader IT and business services market, the IT services segment is particularly significant. It accounted for 78.4 percent of the market, growing by 6.6 percent in 2023 compared to the 8.1 percent growth in 2022. This segment's growth underscores the continued importance of IT services in the overall market landscape.
Neha Gupta, Senior Research Manager at IDC India, notes the dynamic nature of the industry, driven by advancements in AI and GenAI. Enterprises are increasingly focused on rigorously examining use cases to ensure the delivery of measurable business outcomes.
Future Outlook
Looking ahead, the IT and business services market in India is poised for sustained growth. With ongoing investments in advanced technologies and a strategic focus on customer experience and operational efficiency, Indian enterprises are well-positioned to navigate the challenges of volatile macroeconomic conditions.
The interest in GenAI and other transformative technologies will likely continue to shape the investment landscape. As enterprises seek to develop and implement innovative solutions, the role of IT service providers will become increasingly critical.
In summary, the projected growth of India's IT and business services market to $20.7 billion by 2028 highlights the sector's resilience and adaptability. As companies continue to leverage advanced technologies to drive business outcomes, the market is set to experience robust expansion in the coming years.