India's IT services mkt to reach $12.8 bn by 2013

NEW DELHI, INDIA: The domestic IT services market in India is estimated to grow from $5.7 billion in 2008 to $12.8 billion in 2013. This represents a compounded annual growth rate (CAGR) of 18.6 percent, according to the latest research from Springboard Research.

The report predicts the Indian IT services market will be heavily dominated by infrastructure services, which are expected to reach $7.2 billion in 2013 reflecting a steady 53 percent marketshare, and a CAGR of 18.1 percent from 2008 to 2013. However, application services remain the fastest growing market segment with a CAGR of 19.6 percent. The IT consulting services remain the smallest with the expected marketshare of five percent and CAGR of 16.4 percent.

“The Indian domestic IT services market is at par with international levels in terms of average gross margin and provides immense opportunity to the vendors,” said Sudip Saha, Sr Research Analyst for Services, Springboard Research. “However, to meet high consumer expectations, vendors need to strategize around services delivery by implementing efficient processes, reusable tools, templates and replicable models,” Saha added.

The report reveals that infrastructure hosting services showed the highest growth over the period among the infrastructure services category with a CAGR of 23.4 percent, closely followed by enterprise IT outsourcing, network integration and network management. Also, application hosting enjoys the highest growth momentum in the application service market followed by application management and infrastructure application integration.

In terms of vertical industries, banking, financial services and insurance (BFSI) leads the Indian IT services market with 21.5 percent marketshare, followed by the public sector (including education) and telecom industry. However energy and utilities, followed by healthcare remain the fastest growing vertical industries.

“With industries such as public sector, healthcare, energy and utilities, transportation and logistics stepping up their IT spending, the appeal for the Indian domestic market has increased tremendously and is drawing the attention of domestic and MNC IT service providers,” said Phil Hassey, VP-Services Research, Springboard Research. “However, the key challenge remains the disability to convert the potential demand into successful client engagement,” Hassey added.