Strong rebound for domestic Indian IT services market: Ovum

INDIA: Ovum, the global ICT advisory and consulting firm, predicts 2010 to be a good year for the domestic Indian IT Services market.

According to a market sizing and forecasting model titled “India Market Trends 2009: IT services forecast”, the Indian IT Services market is anticipated to grow about 23 percent during 2010. Despite the positive outlook, the market will not see pre-recessionary growth levels until the tail end of the forecast period in 2013.

End users are expected to remain cautious with discretionary spending not picking up until 2011. By the end of the forecast period in 2013, the Indian IT services market will grow to over $24 billion, from $11 billion in 2010, mainly propelled by large e-governance projects being undertaken by central government.

2008 was a particularly buoyant year for the Indian IT Services market as strong economic growth helped propel IT spending. However, the latter part of 2008 and 2009 witnessed slowing growth as the global economic crisis made customers tighten purse strings. But India never technically went into recession, and with the global economy on its way to recovery, economic activity has also picked up in India.

"The recession did impact the IT services market in India, with spending growth across all service lines witnessing a decline. However, growth in the Indian IT Services market is picking up as customers have renewed spending and are putting out work that was on hold during the past year. The resilience of the Indian economy and its rapid progress to normalisation should bring more investment, driving growth in the sector," commented Hansa Iyengar, co-author of the forecast, who is based out of Ovum’s India office.

"The pent-up demand from key verticals has resulted in a strong rebound. Still, the market remains fragmented with the top 10 vendors accounting for only 33 percent market share. We anticipate deal sizes to get larger as customers look at the consolidating contracts to reap greater cost benefits which ought to play well to the strength of the top vendors in the region," added co-author Nishant Singh.