End user spending on IT services in India is on track to total nearly $15 billion in 2019, an increase of 9.8% from 2018, according to Gartner. Spending on business process outsourcing (BPO) is forecast to achieve the highest growth in 2019, at 14.4% year over year.
According to the research firm, in 2019, end user spending on IT services in India will represent 59% of total end-user spending on IT services in emerging Asia/Pacific, and it is on track to reach 60% in 2020.
“High GDP growth rates are driving local organisations to increase their investment in infrastructure, applications and digital initiatives, which are increasingly moving to the cloud. Nontraditional sectors, such as logistics and transportation and manufacturing, are also experiencing healthy growth rates, and their business models are centred on investments in IT,” stated Arup Roy, research vice president at Gartner.
BPO is the segment where Indian end-user organizations will increase their IT services spending the most in 2019. End user spending on BPO is on course to reach $1.7 billion in 2019 and is forecast to reach $1.9 billion in 2020.
Gartner analysts expect that crowdsourcing, working at home (WAH)/teleworking, and the “gig economy” will account for 40% of the customer management (CM) BPO workforce by 2021, up from 7% in 2017. By 2021, it will account for an estimated 900,000 people.
“Most of this workforce — nearly two-thirds — will be employed by CM BPO service providers, while the rest will be employed by end-user companies directly,” said Roy.
“A key benefit of crowdsourcing, WAH/teleworking and the gig economy is access to specialized talent that may not all reside in the same area or that may be unwilling to commute to a central location to work.”
In addition, this model helps mitigate some other business risks, by, for example, providing clear benefits from a business continuity perspective and helping attract buyers from a corporate social responsibility perspective.
In 2019, managed services and cloud infrastructure services remain the biggest segment in terms of spending on IT services in India, accounting for close to $6 billion. The segment represents 40% of the end-user spending on IT services in India.
“We have identified a shift in how organisations adopt cloud technologies,” said Roy.
“Organisations in India are increasingly looking to acquire not only cloud infrastructure as a service (IaaS) resources themselves, but also the automated management of those resources, management tools delivered as services, and cloud software infrastructure services.”
As a result, Gartner said it expects that while IaaS-only cloud providers will continue to exist, they will become increasingly niche due to the breadth and depth of service offerings that end-user organisations require.