IBEF: October 31, 2019
India IT services companies are likely to grow at the faster rate in 2020 backed by expected growth in IT spending by clients globally during the said period.
According to global research firm Gartner's report, total spend in the IT services space is likely to grow by 5.5 per cent in 2020 and will touch US$ 1.08 trillion as compared to 3.7 per cent rise estimated for 2019.
The report also stated that this year's slowdown in spending is not going to be extended in 2020, despite concerns over recession and companies cutting on discretionary IT spending. Demand will mostly be driven by the companies catching up on cloud spending, the report added.
Report indicates that market size of the global cloud computing was US$ 36.7 billion in 2018, which is likely to grow at a CAGR of 29.2 per cent to reach US$ 285 billion by the end of 2025.
"The first phase of cloud adoption is now over. Companies were initially testing to see how the benefits were playing out, but now they are getting on to mainstream.
The sizes of the deals are becoming larger. That is going to be one of the strongest drivers for improved growth of IT services from next year onwards," said Mr. Harit Shah, IT analyst at Reliance Securities.
Digital transformation will be increasing because small and medium players are going to increase their digital spend and in order to compete with new age-firms, traditional manufacturers will adopt technology.
"Overall the digital trend will continue to accelerate and every company will grow digitally as it directly impacts company's products, services, business model and revenue, which will translate to larger IT spending," said Mr Pareekh Jain, founder of Pareekh Consulting and an IT outsourcing advisor.
The US is leading in terms of cloud adoption, whereas, UK and China are also catching up by giving a boost to total cloud spending universe, the Gartner's report said. "The US is leading in cloud adoption and accounts for over half of global spending on cloud. The country directly behind the US on cloud spending is the UK, which only spends 8 per cent on public cloud services. An interesting outlier is China that has the highest growth of cloud spending of all countries," the report said.
On overall IT spending, which includes data centre systems, enterprise software, devices, communication services apart from IT services segment, is also likely to grow at a healthy pace in 2020. Total IT spend is projected to touch $3.87 trillion next year, growth of 3.7 per cent as compared to a rise of 0.4 per cent in 2019.
Apart from IT services, enterprise software will be another growth area, which is anticipated to reach to grow at 10.9 per cent reaching US$ 507 billion in 2020. Even communication services, devices and data centre systems will clock growth in 2020 after witnessing a shrinkage in 2019.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.