Our Bureau

Hyderabad , July 4

THE Indian IT services market, which has recorded a strong growth at 26.7 per cent in 2004-05 for the Asia-Pacific region, is projected to grow at a compounded annual growth rate (CAGR) of 19.8 per cent through to 2009, according to a report by Gartner.

The report, announced on Monday by the research and consultancy major, Gartner, predicts that the Asia-Pacific IT services market will have a CAGR rate of 8.9 per cent from 2004 through 2009, outpacing the global growth rate of 6.1 per cent.

While emerging markets of India and China are seen as the main engines of growth in the next few years, it forecasts that professional services, led by development and integration, IT management and consulting, will be the region's strongest performing IT services market segment.

The Principal Analyst, Asia Pacific for IT Services and BPO, Gartner, Mr Ravindra Datar, in a statement said, "As the Indian economy grows and merges further with the global economy, the focus of demand for IT services will shift from large deals signed by large enterprises to increasing number of mid-size and smaller enterprises. This is expected to drive the next phase of growth in the Indian IT services market. Further, large number of captive and third party offshore service facilities for IT and BPO being set up in the country are also driving demand."

While India has established itself as a leading destination for offshore IT and BPO services in the last 10 years, the domestic market demand has started picking up growth very recently. Need to meet regulatory compliance requirements in the banking and financial services sector, deployment of IT to improve business efficiency and global strategies will drive growth of IT services.

Large-scale IT deployment by the Central and State Governments and public sector enterprises to reduce cost of governance, improve transparency and make the processes more user-friendly for the citizens. There will also be some rub-off effect of global successes of Indian IT services and BPO companies on the Indian market.

Consulting, development and integration are continuing to grow with good demand, while IT management and process management spending is rapidly growing, though over a much smaller base. Government spending is also growing rapidly, due to national and State Governments moving ahead with their e-governance plans. This trend will continue during the next 4-5 years.

Although India's total IT services market will still be one-third smaller than China at $5.3 billion by 2009, its development and integration size will be almost the same as China, at around $3 billion.

IT management and consulting would be among the key thrust areas. Gartner says the comeback of consulting shows that companies need to transform their business, not only by cutting costs, but also by learning how to better use IT resources and processes to grow their business.

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