IT services mkt grows lower-than-expected at 6.5% in H2 2013

The IT services market in the country grew at a lower-than-expected pace of 6.5 per cent to Rs 2.56 lakh crore (USD 4.1 billion) in July-December 2013 due to lower spend on infrastructure and cautious approach by enterprises, research firm IDC said.
The India IT services market in the second half of 2013 has seen a sluggish growth compared to same period in 2012, as the dynamic market conditions compelled enterprises to take a cautious approach towards their technology budgets, IDC said in a statement today.
Support services saw a quiet period in terms of growth at 5.5 per cent in H2 CY2013 with organisations looking at cost-cutting measures and holding off plans for hardware and software refresh, IDC said.

System integration and IT consulting services also registered growths of 6.8 per cent and 6.3 per cent, respectively, which were a bit slower than the first half of 2013 owing to fewer infrastructure projects, it added.
Outsourcing services market, though one of the leading segments in the IT services market, saw a slight decline than the previous half of the year. It grew by close to 7.1 per cent in July-December 2013 over H2 CY2012.
IDC said large outsourcing contracts are being replaced by small discrete outsourcing deals, where the contract value and length of contract have come down to 3-5 years instead of 7-10 years.

Managed services market has picked up pace as firms are looking for solutions which are efficient and cost effective.

However, concerns around providers' capabilities to manage vertical specific applications remain high, which is limiting the kind of applications getting outsourced and the overall scope of engagement, it said.
"The growing complexity of enterprise IT environments, combined with the challenge of availability of advanced technical skills, will push organisations to turn to outsourcing services," IDC Senior Analyst (IT Services) Sachin Chaturvedi said.
IBM managed to command almost 12.1 per cent of the IT services market in India in H2 2013, followed by Wipro (7.4 per cent), IDC said.

"The service providers landscape is set for the battle for dominance as the competitive landscape heats up with the continuing spend and increasing maturity in the India IT Services space" Chaturvedi said.
Key sectors like banking and financial services, manufacturing, telecom and government make up for a large portion of total IT services spend in India.
In July-December 2013, all these sectors put together constituted 82.5 per cent of the total spend.