DBT Bureau
Bengaluru, 8 May
Global IT services spending is likely to touch $2 trillion in the next five years, averaging an annual growth of 4.6% till 2028, the Forrester Global IT Services Market Forecast 2023-2028 showed.
The technology consultancy firm, however, pointed out that IT services firms are likely to face challenges in the next few years, including retaining talent and balancing headcount. Increased competition from software and engineering firms along with the effects of generative AI will make the going tough for IT services firms.
The report pointed out that the growth of IT services would be the highest in the Asia-Pacific region, with a growth rate reaching 6% in the near term.
“Overall, the IT services industry will average 4.6% annual growth, with infrastructure as a service (IaaS) averaging annual growth of nearly 16%. Growth will be fastest in Asia Pacific, reaching almost 6%,” the report said.
Among the growth spots, the consultancy firm pointed out that growth would be driven by financial services & manufacturing, managed services, & cybersecurity.
In the financial services & manufacturing space, the growth opportunity is significant as Accenture estimates that only 5% of manufacturing and engineering services companies have mature digital capabilities so far. As ten of the largest IT services companies saw 44% of their revenues coming from financial services, manufacturing, and energy; the growth potential remained high in these verticals.
Infrastructure as a service is likely to continue its dream run as this segment is likely to nearly double its share of the IT services market from 8% in 2022 to 15% in 2028.
Cybersecurity is another growth spot as the report points out that the growth in consulting, outsourcing, managed services, solution deployment and integration, maintenance, and support in the cybersecurity area will drive demand for IT services.
It, however, pointed out that growth would be tepid in 2024 owing to low real GDP growth.
“Only in 2025 will real global GDP growth (a strong predictor of IT services growth) exceed pre-pandemic levels,” the report noted.
Therefore, IT firms have to manage headcount growth in this era of automation, competition from software and engineering firms, & impact of GenAI on service delivery in 2024.
