Indian IT Services Market Rises to $3.76 Billion in H1 2014: IDC

IT services market in the country grew at a slower pace of 7.4 percent to Rs. 22,826.2 crores ($3.76 billion) in the January-June 2014 period, mainly due to political and economic uncertainty amid Lok Sabha polls, research firm IDC said on Thursday.

According to IDC, overall political developments in the country during the first half of this year had an impact on project-based services with few infrastructure deals being signed as the industry was waiting for the formation of a stable government at the Centre.

The investments are likely to pick up in 2015 on the back of boost in business confidence, helped by the new government's policies and economic growth agendas, it said in a statement.

While spending in the government sector was sluggish, banking, financial services and institutions fared well with investments in enterprise data warehouse, analytics, customer relationship management (CRM) etc, driven by competition to catch up with the private sector banks and branch expansion.

"Support services saw a quiet period in terms of growth in first half of 2014 with organisations looking at cost cutting measures and holding on their hardware and software refresh. The segment grew 6.9 percent over same period in 2013," it added.

Spending on the system integration and IT consulting services registered growth of 6 percent and 6.6 percent respectively, which was quiet slower than the second half of 2013, owing to decrease in spend on infrastructure projects.

IDC said outsourcing services continued to be the fastest growing macromarket seeing a growth of 8.8 percent in January-June 2014 over the same period in 2013.

Large outsourcing deals are being broken into smaller sizes, as companies prefer to work with more than one vendor, it said.

Companies not only manage to get a good pricing advantage, but also access to niche technology vendors.

"Cost pressures are driving the adoption of managed and data centre services among small and medium enterprises as they now realise the advantage of utilizing IT systems in an OPEX model," IDC Senior Analyst IT Services Sachin Chaturvedi said.

IBM continued to lead the market and managed to command the IT services market in India in the said period, though it struggled to grow as competition intensified from vendors like TCS, Wipro and HCL Technologies. Wipro was placed second.

"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 2-3 years," Chaturvedi said.

Service providers are now looking at optimising resources for their customers to offer them a leaner organisational infrastructure, he added.