Indian IT services market to grow 12% to touch $10.2 billion in 2013 from $9.1 billion in 2012

Infotech Lead India: The India IT services market is likely to touch $10.2 billion in 2013, up 12 percent from estimated $9.1 billion in 2012.


“Although India’s IT services growth rate has slowed in the past two years, the rate of growth remains relatively high,” said Arup Roy, principal research analyst.

Services spending on the transparency and efficiency-related projects from the government, such ase-governance projects Unique Identification Authority of India and Accelerated Power Development and Reforms Programme, are expected to drive service spending.

Government infrastructure projects will strongly drive IT, in conjunction with the expansion of the financial services and manufacturing subsectors. All industry verticals have a high propensity and willingness to spend on IT given the growth story across the board.

The India domestic IT services market is fast transitioning, with profound changes in buying needs and behavior. The number, size and scale of IT services deals are increasing. Buyers are becoming more sophisticated in their sourcing practice and vendor management.

Deals are transitioning from first- to second-generation outsourcing. The Indian market of the future is likely to see efficiency and enhancement-based deals in energy and utilities, transportation, education and parts of government bodies. Likewise, the market is likely to see more transformation deals in banking and insurance, telecom, retail and government.

Gartner said service providers wishing to enter into the Indian market, must factor in the rising infrastructure and IT labor rates, coupled with high attrition levels, in their planning exercise for their operations costs, as well as local regulations and bureaucratic challenges in establishing and operating businesses in India.

Leveraging Tier 2 and Tier 3 cities (Kolkata, Trivandrum and Lucknow, for example) for Indian business is a tactic that could be used in conjunction with the mainstream delivery from Tier 1 locations.

Recently, reported that as far as results of large-cap companies are concerned, Infosys and Wipro continued to post lower-than-expected numbers, whereas TCS and HCLT continued to meet expectations. Cognizant has also met its quarterly guidance and has maintained its full-year guidance. While the economic slowdown has impacted overall growth rates, the difference in performance of different companies is likely due to company-specific issues like varying exposure to impacted verticals like BFS, Telecom, etc; exposure to troubled clients, especially in BFS, utilities, Telecom, etc; and issues like management re-structuring, corporate strategy, etc.

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