Indian IT Services Market Grows 6.4% in 1H2024 Driven by AI and Digital Transformation --IDC

According to the International Data Corporation (IDC) Worldwide Semi-annual Services Tracker, the Indian IT Services market grew by 6.4% year-over-year (YoY) in 1H2024, contributing 79.2% of the overall IT & Business Services market. While this growth marks a slight moderation from 6.7% in 1H2023, it reflects sustained investments in digital transformation, cloud migration, and GenAI adoption. Indian enterprises remained committed to critical IT initiatives, prioritizing cost optimization and operational efficiencies to drive competitiveness.

Harish Krishnakumar, Senior Market Analyst, IT Services, IDC India.

The broader IT and Business Services market in India reached USD 7.4 billion in 1H2024, registering a 5.9% YoY growth, compared to 6.2% in 1H2023. The market is projected to expand at a CAGR of 6.4% between 2023 and 2028, reaching USD 19.8 billion by the end of the forecast period. Modest overall growth reflects enterprise caution amid macroeconomic uncertainties, though continued investments in IT-led business transformation signal long-term resilience and opportunity.

“Indian enterprises prioritized critical projects in areas like digital transformation, cloud migration, GenAI, cybersecurity, etc., amidst cost optimization initiatives to drive innovation, improve business outcomes, and remain competitive,” said Harish Krishnakumar, Senior Market Analyst, IT Services, IDC India. “As the macro-economic environment gradually improves, the resulting rebound in discretionary spending and increased investments in digital transformation are expected to drive IT services investments during the forecast period. Investments in GenAI would likely surge as enterprises try leveraging GenAI for improved decision-making, enhancing customer experience, etc., as well as integrating this into existing business applications, with IT service providers as their prime technology partners for their GenAI plans.”

IDC classifies the IT and Business Services market into three primary markets – Project-Oriented, Managed Services, and Support Services. For 1H2024, project-oriented services registered the highest growth rate at 6.4%, followed by managed services at 5.6% and support services at 5.4%, respectively.

The system integration segment will be driven by initiatives like cloud migration, application modernization, integration of emerging technologies, etc., and services around data engineering, infrastructure modernization, and implementation services to facilitate GenAI adoption. The managed services segment will be driven by the need to efficiently manage enterprise applications and infrastructure across complex distributed IT environments.

“The India IT ecosystem stands at a pivotal moment. As investments in AI and GenAI transition from discussions to implementation, the demand for advanced capabilities and elevated expectations from IT service providers is set to reshape the industry,” said Neha Gupta, Senior Research Manager, Software and IT Services Market, IDC India. “Vendors are integrating AI into their offerings to enhance intelligence and operational efficiency. Consequently, the spotlight is on achieving data efficiency, ensuring robust security, and prioritizing the upskilling and reskilling of talent. The coming 12-18 months promise to bring transformative changes, redefining the trajectory of Indian IT services."

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