CRN Network, July 12, 2011, 1300 hrs
The India IT services market is expected to reach $9.5 billion in 2011, an 18 percent increase from 2010 revenue of $7.6 billion. India’s domestic IT services market ranks third in Asia/Pacific. The market is forecast to reach $15 billion by the end of 2014, according to Gartner.
“India’s domestic IT services market is an emerging market,” said Arup Roy, Principal Research Analyst, Gartner. “Coupled with other factors such as openness to adopt technology, and a maturing sourcing approach, it represents a target potential for providers of all sizes. The top 10 providers have a cumulative market share of 42 percent, indicating a highly fragmented market served by many small players.”
India's IT services market is quite small as compared to large markets such as the US or the UK, but it does offer a growth opportunity to the service providers because of the buoyant market conditions. The market has the potential to expand further with “as a service”-type service offerings. “With a historic focus on cost, rather than on value for money, of services, as well as a propensity for scope creep in Indian services deals, new market entrants must be careful about the opportunities they target,” said Roy. “These providers should consider providing as-a-service/pay-as-you-go offerings to counter some of these market challenges.”
Currently, only four industry verticals including banking, financial services, and insurance; telecommunications; manufacturing; and government make up the bulk of the market (85 percent of all IT services spending). This means that other industry verticals offer a good opportunity of growth as they start opening up and start engaging with external service providers (ESPs).
“There is still room for new players, and the barrier to entry is quite low. Hence, this market presents an immense opportunity for any large credible player to consolidate its position and grab market share. In the recent past, the cost of labor and infrastructure in tier -1 cities has been rising, but it still is one of the lowest in the world. It also varies widely by region, and in some regions, providers can offer extremely competitive rates, “said Roy.
India's IT services market is quite small as compared to large markets such as the US or the UK, but it does offer a growth opportunity to the service providers because of the buoyant market conditions. The market has the potential to expand further with “as a service”-type service offerings. “With a historic focus on cost, rather than on value for money, of services, as well as a propensity for scope creep in Indian services deals, new market entrants must be careful about the opportunities they target,” said Roy. “These providers should consider providing as-a-service/pay-as-you-go offerings to counter some of these market challenges.”
Currently, only four industry verticals including banking, financial services, and insurance; telecommunications; manufacturing; and government make up the bulk of the market (85 percent of all IT services spending). This means that other industry verticals offer a good opportunity of growth as they start opening up and start engaging with external service providers (ESPs).
“There is still room for new players, and the barrier to entry is quite low. Hence, this market presents an immense opportunity for any large credible player to consolidate its position and grab market share. In the recent past, the cost of labor and infrastructure in tier -1 cities has been rising, but it still is one of the lowest in the world. It also varies widely by region, and in some regions, providers can offer extremely competitive rates, “said Roy.
By Dhaval Valia
