The India IT services market in 1H 2014 saw a slower growth mainly due to the May Lok Sabha elections. According to International Data Corporation (IDC) the IT services market in India witnessed an year on year growth of 7.4% in 1H CY 2014 over 1H CY 2013, to reach a value of INR 2,28,262 million (USD 3.76 billion)[i]. Overall political and economic uncertainty has had an impact on project-based services in the first half of 2014 with few infrastructure deals being signed.
Support services saw a quiet period in terms of growth in 1H CY 2014 with organizations looking at cost cutting measures and holding on their hardware and software refresh. The market saw a growth of 6.9% over 1H CY 2013. Spending on the system integration and IT consulting services also registered a growth of 6% and 6.6% respectively, which was quiet slower than the 2H 2013 owing to decrease in spend on infrastructure projects.
Outsourcing services continued to be the fastest growing macromarket seeing a growth of 8.8% in 1H CY 2014 over 1H 2013. Large outsourcing deals are being broken into smaller sizes, as companies prefer to work with more than one vendor. Companies not only manage to get a good pricing advantage, but also access to niche technology vendors.
Sachin Chaturvedi, Senior Analyst for IT Services at IDC says " Cost pressures are driving the adoption of managed and data center services among small and medium enterprises as they now realize the advantage of utilizing IT systems in an OPEX model.”
"Implementation of Social, Mobile, Analytics and Cloud (SMAC), big data and other emerging technologies will result in significant investment in new IT infrastructure by both private and public sectors in the coming 2 or 3 years. Service providers are now looking at optimizing resources for their customers to offer them a leaner organizational infrastructure " says Chaturvedi.
While spending in the government sector was sluggish, BFSI fared well with investments in enterprise data warehouse, analytics, CRM etc, driven by competition to catch up with the private sector banks and branch expansion. With the national manufacturing policy in place there is a demand for SCM, CRM, ERP, product life-cycle management in this sector
