New Delhi: With more and more domestic companies adopting digital transformation initiatives, the Indian Information Technology (IT) industry grew by 7.2% year-on-year in 2021, higher than the 5.3% growth witnessed in the previous year. According to a report by market research firm International Data Corp (IDC), the domestic IT services industry was valued at $14.15 billion in 2021.
According to IDC, adoption of new technologies such as cloud platforms, Artificial Intelligence (AI) based services, cyber security and modernization of applications have helped the growth of IT services in the last year. Going forward, the domestic IT services industry is projected to reach $21.67 billion in valuation by 2026, at an estimated compound annual growth rate (CAGR) of 8.9%.
Harish Krishnakumar, senior market analyst for IT services at IDC India, said enterprises in India will increase their IT spend by 2021 to improve the flexibility and efficiency of their business operations and enhance customer experience. He added that the adoption of the hybrid work model increased IT spending in India across the industry.
IDC India has said that the demand for digital transformation and adoption of new technologies over the past few quarters, which was delayed due to the COVID-19 pandemic, is fueling the growth of IT services in India. It added that project-oriented IT services among domestic IT services grew by 7.9% year-on-year.
“IT service providers continue to build capabilities on digital technologies through solution- and platform-centric approaches. Along with automation and AI, areas such as cloud and security are seeing momentum. We see this trend continuing as Indian enterprises look to their service providers as they move towards their goal of becoming the enterprise of the future,” said Sharath Srinivasamurthy, Director of Research, Enterprise Solutions, IDC India.
This growth growth was reflected in HCL Technologies’ Q4 FY22 results released earlier this month. HCL Tech said revenue from its IT and business services increased to $2.199 billion in the previous quarter.
HCL’s managing director and chief executive officer C. Vijayakumar said during the company’s earnings call that strong growth in “digital, cloud and engineering services” boosted the IT services provider’s overall quarterly revenue in the country.