India's IT Services Sector Set for 4-6% Growth, Outpacing FY24's 3.8% Surge

CIOTechOutlook Team | Tuesday, 17 December 2024, 05:19 IST

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The Indian IT services sector is expected to experience growth between 4-6 per cent, which is an improvement over the low-single digit increase of 3.8 per cent projected for FY24, according to the report. As demand continues to lag, the industry's hiring goals are also anticipated to remain modest.

According to an Icra report, the Indian IT services sector is projected to achieve revenue growth in the mid-single digits for the fiscal year 2024-2025 (FY25).

“Hiring is likely to pick up materially only by the end of H1 FY26,” said the report.
 
Icra’s projections align with the forecast provided by UnearthInsight — a market intelligence company, which anticipates that the sector will achieve growth of 5-6 percent for FY25. The industry will surpass the $265 billion mark this year.

UnearthInsights additionally stated that a compound annual growth rate (CAGR) of 7-8 percent is anticipated for long-term growth until 2030. Ongoing sluggish revenue growth will also affect the sector's hiring trends.

“While there has been some recovery in Q2 FY25, hiring will remain low in the near term until the growth momentum picks up. The formation of the new government in the US may create some policy uncertainty in the immediate term and thus will remain monitorable,” said the Icra report.

Recruitment by IT services firms reached an unprecedented level in FY22 and the first half of FY23, driven by robust demand for digital solutions and efforts to address rising attrition rates.

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