BANGALORE, INDIA: Ovum, the global ICT advisory and consulting firm, predicts 2010 to be a good year for the domestic Indian IT Services market.

According to a market sizing and forecasting model titled “India Market Trends 2009: IT services forecast”, the Indian IT Services market is anticipated to grow about 23 per cent during 2010.

Despite the positive outlook, the market would not see pre-recessionary growth levels until the tail end of the forecast period in 2013. End users are expected to remain cautious with discretionary spending not picking up until 2011.

The report states that by the end of the forecast period in 2013, the Indian IT services market would grow to over $24 billion, from $11 billion in 2010, mainly propelled by large e-governance projects being undertaken by central government.

However, the latter part of 2008 and 2009 witnessed slowing growth as the global economic crisis made customers tighten purse strings. But India never technically went into recession, and with the global economy on its way to recovery, economic activity has also picked up in India.

“The recession did impact the IT services market in India, with spending growth across all service lines witnessing a decline. However, growth in the Indian IT Services market is picking up as customers have renewed spending and are putting out work that was on hold during the past year. The resilience of the Indian economy and its rapid progress to normalization should bring more investment, driving growth in the sector,” commented Hansa Iyengar, co-author of the forecast, who is based out of Ovum’s India office.

He added that the pent-up demand from key verticals has resulted in a strong rebound. Still, the market remains fragmented with the top 10 vendors accounting for only 33 per cent market share. They anticipate deal sizes to get larger as customers look at consolidating contracts to reap greater cost benefits which ought to play well to the strength of the top vendors in the region.