The Indian information technology (IT) industry increased 7.2% yearly in 2021, up from 5.3% the previous year, as more local enterprises adopted digital transformation projects. As a result, the domestic IT services business was valued at $14.15 billion in 2021, according to a market research firm International Data Corp (IDC) survey.
According to IDC, adopting new technologies such as cloud platforms, AI-based services, cyber security, and application modernization contributed to the rise of IT services last year. With an estimated compound annual growth rate (CAGR) of 8.9%, the domestic IT services industry will reach $21.67 billion in value by 2026.
Harish Krishnakumar, a senior market analyst for IT services at IDC India, said enterprises in India increased their IT spending through 2021 to “improve the resiliency and efficiency of their business operations, and enhance customer experience.” He added that adopting hybrid work models across the industry pushed up IT spending in India.
According to IDC India, the rise of IT services in India has been fueled by pent-up demand for digital transformation and acceptance of new technology, which has been delayed due to the covid-19 pandemic. Project-oriented IT services grew the fastest, at 7.9% year on year, among domestic IT services, according to the report.
“IT services providers continued to build capabilities on digital technologies through solution and platform-centric approaches. Areas like cloud and security continued to see momentum along with automation and AI. We see this trend continuing as Indian enterprises will look up to their service providers, as they progress towards their goal of becoming a future-enterprise,” said Sharath Srinivasamurthy, research director of enterprise solutions at IDC India.
HCL Technologies’ Q4 FY22 earnings, reported earlier this month, reflected this growth. Last quarter, HCL Tech’s IT and business services revenue increased to $2.199 billion.
During the company’s earnings call, C. Vijayakumar, managing director and chief executive, claimed that significant growth in “digital, cloud, and engineering services” bolstered the country’s IT service provider’s overall quarterly revenue.