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Ovum forecasts strong rebound for Indian domestic IT

Demand from the Indian government, telecoms, industrial and utilities segments are expected to propel growth in India during 2010, according to a new forecasting model from Ovum. The market will witness the revival of larger, consolidated outsourced contracts...

Ovum, the global ICT advisory and consulting firm, predicts 2010 to be a good year for the domestic Indian IT services market.  According to a market sizing and forecasting model entitled India Market Trends 2009: IT Services Forecast, the Indian IT services market is anticipated to grow about 23% during 2010. Despite the positive outlook, the market will not see pre-recessionary growth levels until the tail end of the forecast period in 2013.

 End-users are expected to remain cautious with discretionary spending not picking up until 2011. By the end of the forecast period in 2013, the Indian IT services market will grow to over US$24 billion, from US$11 billion in 2010, mainly propelled by large e-governance projects being undertaken by central government.

The year 2008 was a particularly buoyant one for the Indian IT services market as strong economic growth helped propel IT spending. However, the latter part of 2008 and 2009 witnessed slowing growth as the global economic crisis made customers tighten purse strings. In fact, India never technically went into recession, and with the global economy on its way to recovery, economic activity has also picked up in India.

“The recession did impact the IT services market in India, with spending growth across all service lines witnessing a decline. However, growth in the Indian IT Services market is picking up as customers have renewed spending and are putting out work that was on hold during the past year. The resilience of the Indian economy and its rapid progress to normalisation should bring more investment, driving growth in the sector,” commented Hansa Iyengar, co-author of the forecast, who is based in Ovum’s India office.

“The pent-up demand from key verticals has resulted in a strong rebound. Still, the market remains fragmented with the top ten vendors accounting for only 33% market share. We anticipate deal sizes to get larger as customers look at consolidating contracts to reap greater cost benefits which ought to play well to the strength of the top vendors in the region,” added co-author Nishant Singh.

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