Covid-19 may slow Indian IT sector growth to 6.5% by end of Dec: IDC

The ongoing Covid-19 pandemic may impact the growth of information technology (IT) sector in the near term, data intelligence firm IDC said in a report.

Domestic technology companies are expected to grow 6.5% in constant currency terms to $14 billion by December-end, according to the Worldwide Semiannual Services Tracker report.

Between 2019 and 2024, the IT sector is expected to grow at a compounded annual growth rate (CAGR) of 7.6%, it said.  

In the period between July and December 2019, the sector grew 8%, led by project-oriented services, followed by managed services and support services, the report said. However, demand for project-oriented services, a key driver of growth for the sector so far, will fall in the coming months, it added. 

On the other hand, there will be a surge in demand for helpdesk support services as more professionals work from home, it said. Demand for consulting, managed security, network management and hosting services is also expected to increase, it added. 

“Digital technologies are the core in ensuring business continuity in this challenging time, with cloud and artificial intelligence being the technology forerunners. Enterprises that had invested in digital transformation initiatives in the past have proved to be more resilient than companies that have been laggards in technology adoption,” Garima Goenka, market analyst (IT services), IDC India, said.

Despite curbs on movement of personnel, IDC expects technology companies to honour long-term managed services contracts, Shweta Baidya, senior research manager (software and IT services), IDC India, said.

“Vendors have created emergency response teams, and are also leveraging automation tools and artificial intelligence (AI) to provide uninterrupted service to their employees and customers,” she added.

Read: Coronavirus India LIVE updates

India’s IT sector spending is expected to drop 4.5% in 2020 against the previous year’s growth rate of 9.1%, IDC said in a separate report on Monday.

For the January-December 2020 quarter, IT companies such as Infosys, Tata Consultancy Services, Wipro and Tech Mahindra posted muted growth in reported terms. 

In February, industry lobby NASSCOM announced a 7.7% revenue growth for FY20 -- slightly higher than the 7% growth in FY19.