Gartner: India IT Services to reach $9.5 Billion in 2011

The India IT services market is on pace to reach $9.5 billion in 2011, an 18 percent increase from 2010 revenue of $7.6 billion, according to Gartner, Inc. India's domestic IT services market ranks third in Asia/Pacific. The market is forecast to grow to $15 billion by the end of 2014.

Arup Roy, Principal Research Analyst said, "India's domestic IT services is a large emerging market in high growth mode. Coupled with other factors such as openness to adopt technology, and a maturing sourcing approach, it represents an attractive target potential for providers of all sizes. The top 10 providers have a cumulative market share of just 42 percent, indicating a highly fragmented market served by many small players with no large, dominant, well-entrenched player. However, this scenario varies widely by submarket such as by industry vertical. With a historic focus on cost, rather than on value for money, of services, as well as a propensity for scope creep in Indian services deals, new market entrants must be careful about the opportunities they target. These providers should consider providing as-a-service/pay-as-you-go offerings to counter some of these market challenges."

"There is still room for new players, and the barrier to entry is quite low. Hence, this market presents an immense opportunity for any large credible player to consolidate its position and grab market share in a big way. In the recent past, the cost of labor and infrastructure in Tier 1 cities has been rising, but it still is one of the lowest in the world. It also varies widely by region, and in some regions, providers can offer extremely competitive rates. India domestic market presents a high growth opportunity at a good critical mass for a broader group of mainstream global providers and small to midsize providers to start competing in the Indian domestic market. Companies who are planning to invest in India to target the domestic market should develop a realistic target of their revenue and growth potential in the medium to long term," further said Arup Roy.