End-user spending on IT services in India to reach $18 billion in 2021: Gartner

Our Bureau Mumbai | Updated on July 20, 2021

Spending on IT services had slowed down in 2020 but did not decline

End-user spending on IT services in India is on track to reach $18 billion in 2021, a growth of 10.7 per cent from 2020, according to Gartner, Inc.

“The Indian IT services market has proven its durability through the last 15 months of the pandemic. The surge in remote working, need for business continuity planning and increased focus towards digitalisation has increased the demand for IT services,” said Arup Roy, research Vice-President at Gartner.

Spending on IT services had slowed down in 2020 but did not decline, as per Roy.

“While some digitisation projects were stalled due to IT budget contractions and economic uncertainties in 2020, 2021 is experiencing renewed interest in rapid digitalisation from end-user organisations,” Roy said.

In terms of segment-wise distribution, the consulting segment will be the largest in terms of end-user spending in 2021. It is forecast to total $4.6 billion this year, up from $4.1 billion in 2020.

Spending on Infrastructure Implementation and Managed Services is also expected to reach nearly $4.6 billion in 2021 while that on Application Implementation & Managed Services is expected to total $4.37 billion. Spending on Business Process Services is expected to reach $1.8 billion.

Decline in spending

Hardware support will be the only segment where spending will decline in 2021, as per the report. It will decline 2.8 per cent as end-user organisations reduce their spending on client device support and data center support systems, Gartner said.

In 2021, end-user spending on IaaS will total $1.6 billion, growing 57 per cent as compared to 2020.

“This will be the highest registered growth rate within all segments of IT services spending in India,” as per the report.

While IaaS is expected to contribute to 9 per cent of the total spending on IT services in the country in 2021, by 2025, spending on IaaS is forecast to make up 22.7 per cent of the total spending on IT services in India.

“Organisations in India are moving towards a cloud-only or a cloud-first model, which is why spending on infrastructure as a service (IaaS) will experience strong growth in 2021,” said Roy.

“Indian enterprises are demanding more agility, rapid innovation and a swift move towards becoming a composable enterprise resulting in an increased adoption of cloud through 2021,” Roy added.

Published on July 19, 2021

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