Demand for IT services in the domestic Indian market

Demand for IT services in the domestic Indian market

Due to its rapidly growing economy, India is becoming a lucrative destination for IT services (ITS) vendors. Domestic Indian enterprises are in close competition with international firms entering India, which has led Indian firms to invest significantly in IT services to offer improved processes and enhanced customer service. These positive trends are offset by a shortage of skilled manpower, a relatively high attrition rate, and a change in India’s tax regime that could adversely affect the IT services market. Still, the overall outlook for IT services in India is positive.

Table of contents

Ovum view

High-value deals and rising rupee underscore ITS opportunities in India

Overview — India summary

The second fastest growing economy in the world

Demand-side analysis by verticals

Total demand for IT services expected to increase 44% in India between 2007 and 2008
Financial services
Public sector
Manufacturing
Retail, wholesale, and distribution
Telecommunications
Energy and utilities
Travel, transportation, logistics and hospitality
Healthcare
Media and entertainment

Demand-side analysis by horizontals

Large enterprises lean towards outsourcing but small enterprises remain cautious
Large enterprises
Small and medium enterprises

Demand by service lines

Application services
IT infrastructure services
BPO services

Supply-side analysis

Low margins in the Indian IT services market is the major cause for limited vendor focus
Vendor strategies
Top IT services vendors in India

Opportunities in the Indian market

The number of long-term, single-vendor contracts is growing

Threats

Tax changes and manpower shortage could undermine positive trends

Table of figures

Table 1 Summary of IT services demand trends by verticals
Figure 1 Demand for domestic IT services (2004–2008)
Table 2 IT service revenues generated in the domestic Indian market
Table 3 Overview of the top vendors operating in the Indian domestic market with minimum revenues of $500 million in FY 2007 or at least 5,000 employees