After a period of cautious optimism and slower deal cycles in 2023, India’s IT services market is charting a steady path forward in 2024. The first half of the year witnessed a revival in client engagements, driven by a mix of cloud modernization, GenAI experimentation, and growing demand from the domestic market. IDC expects India’s IT services market to grow by 6.3% year-on-year, reaching $15.1 billion by the end of 2024. Although the growth is slightly below the historical average, it reflects the industry’s shift towards deeper, value-led engagements and its growing role in the strategic transformation of enterprises.
The market’s revival is largely fueled by a combination of GenAI-led projects, demand for hybrid and multi-cloud services, and increased IT spending by Indian enterprises and government departments. Despite lingering macroeconomic concerns in key global markets, Indian service providers remain well-positioned, with diversified portfolios and an ability to deliver across verticals and geographies.

Cloud-first to AI-first: A New Playbook for Digital Transformation
2024 has marked a turning point in the way enterprises approach digital transformation. While cloud remains a foundational pillar, the integration of generative AI into business operations is redefining the scope of IT services. Indian service providers have moved swiftly to adapt to this shift. The year has seen most of the top-tier IT firms either launching or scaling up their proprietary GenAI platforms, co-creating solutions with hyperscalers, and offering dedicated sandboxes for client experimentation.
Enterprises across sectors-ranging from financial services to manufacturing and retail-are now actively engaging in GenAI pilots focused on improving productivity, reducing customer response times, and accelerating software development. GenAI’s integration is no longer confined to proof-of-concept exercises. In sectors like BFSI, AI models are being embedded into risk scoring engines, fraud detection systems, and document summarization tools. In retail and e-commerce, brands are leveraging AI to generate personalized content and enhance virtual customer support.
Service providers are responding by building large GenAI-focused talent pools, upskilling thousands of engineers in LLM deployment, prompt engineering, and ethical AI. IDC estimates that up to 20% of all new IT services engagements in 2024 will either be centered on or significantly influenced by AI-related objectives.

Project Services Make a Comeback
The rebound in 2024 is most evident in the growth of project-oriented services. Following a subdued 2023 when discretionary spending was delayed or reallocated, enterprises have resumed their focus on modernization initiatives. Large-scale transformation projects-especially around application modernization, cloud-native development, and system integration-are back on the table. The renewed confidence in IT investments is driven by the clear business value demonstrated during earlier digital investments, as well as the urgent need to remain competitive in a rapidly evolving technology landscape.
For service providers, this has meant a return to multi-year engagements, albeit with increased accountability on outcomes, efficiency, and speed of delivery. Clients are expecting AI-led automation to be embedded from day one, pushing vendors to reimagine project delivery models. There is also a growing appetite for vertical-specific platforms and accelerators, allowing faster time-to-value in industries such as healthcare, telecom, and logistics.

Managed Services Evolve with Automation and AIOps
Another key trend shaping the IT services landscape in 2024 is the transformation of managed services. As enterprise IT estates grow more complex-spanning multi-cloud environments, edge workloads, and remote workforces-the need for integrated, intelligent managed services has grown considerably. Indian IT firms have responded by embedding automation and AIOps into their offerings, thereby reducing operational costs and increasing service quality.
What was once a primarily reactive support model has now become predictive and autonomous in many areas. For example, infrastructure monitoring tools can now preempt failures using machine learning models, while AI-based service desks are handling first-level employee queries with minimal human intervention. This evolution is pushing service providers to transition away from traditional headcount-based pricing models towards outcome-based contracts.
With global enterprises tightening IT budgets, managed services have also become a strategic lever for cost optimization. Several large organizations have consolidated their vendor base and awarded integrated managed services contracts to Indian firms, expecting not just continuity but innovation and proactive support. This shift is helping vendors drive higher margins while maintaining competitive pricing.

Cloud Spending Shifts Gears, Fueling Services Growth
Cloud remains the bedrock of most digital transformation strategies in India. However, the nature of cloud adoption has matured significantly in 2024. The initial rush to migrate workloads has given way to a more deliberate focus on cloud-native applications, DevOps integration, and FinOps optimization. Enterprises are now re-architecting applications to take advantage of microservices, containers, and API-driven ecosystems.
Moreover, hybrid and multi-cloud strategies have become the norm rather than the exception. With concerns around data residency, vendor lock-in, and performance optimization, Indian enterprises are deploying workloads across multiple hyperscalers, as well as private cloud environments. This trend has created significant demand for cloud strategy consulting, orchestration, and governance services-all areas where Indian IT service providers have built considerable expertise.
The year has also seen a sharp rise in demand for industry cloud platforms-especially in regulated sectors like healthcare, banking, and insurance. These platforms, built with sector-specific compliance and data governance requirements in mind, are helping enterprises accelerate innovation while managing risk.

Domestic Market Picks Up Momentum
While India’s IT services sector has traditionally been dominated by exports, 2024 has brought the domestic market into sharper focus. Spurred by digital public infrastructure initiatives and a growing appetite for digital transformation among Indian enterprises, the domestic IT services market has expanded at a healthy clip.
From government ministries deploying AI-driven platforms to automate citizen services, to private banks building cloud-native core systems, the breadth of digital transformation in India is deeper than ever. Key drivers include the rollout of platforms like ONDC, the scaling of DigiLocker and Aadhaar 2.0, and the increasing use of analytics in healthcare and education.
Domestic IT spending has also been catalyzed by favorable policy interventions. Several states have mandated the use of cloud for departmental IT systems, while the central government has expanded its investments in sovereign cloud and AI research infrastructure. Indian IT service providers, who once focused largely on international clients, are now aggressively targeting domestic opportunities with dedicated public sector business units and region-specific delivery models.

Export Growth Remains Resilient
Despite concerns around recessionary pressures in key global markets, India’s IT services exports have remained resilient in 2024. The U.S., which accounts for over 50% of export revenues, has seen cautious but steady IT spending in critical areas like cybersecurity, compliance, and cloud cost optimization. Meanwhile, Europe and Asia-Pacific have provided new growth opportunities, particularly in sectors such as manufacturing and energy.
The average deal size has declined slightly compared to 2022 highs, reflecting a broader industry trend of shorter, more agile engagements. Clients are increasingly favoring modular contracts with flexible pricing, rather than large, monolithic deals. This is pushing Indian firms to enhance their value propositions with IP-led offerings, accelerators, and low-code platforms.
What’s noteworthy is the growing presence of Indian IT companies in newer geographies like the Middle East, Africa, and Southeast Asia. With digital infrastructure being built at scale in these regions, service providers are establishing on-ground teams, forging local partnerships, and co-creating solutions tailored to regional needs.

Talent Transformation in Full Swing
The IT services industry in India continues to be a significant employer, and 2024 has been a year of strategic workforce transformation. Hiring has stabilized after the post-pandemic surge, but the focus has shifted to quality, specialization, and adaptability. Service providers are investing heavily in upskilling their existing workforce, with a sharp focus on GenAI, full-stack development, cloud architecture, and cybersecurity.
Internal training programs are being supplemented with global certifications and university tie-ups. For instance, companies are collaborating with IITs and foreign universities to develop niche programs in LLM engineering and ethical AI. At the same time, there is a growing reliance on gig workers, freelancers, and outcome-based project teams to handle specialized workloads.
The demand for hybrid skills-such as business analysts with AI knowledge, or cybersecurity specialists with cloud experience-is reshaping recruitment strategies. As the sector prepares for long-term transformation, talent development has emerged as a board-level priority.

Outlook: From Delivery Powerhouse to Innovation Engine
As 2024 enters its final quarter, India’s IT services market stands at a crossroads. It is no longer just a global delivery powerhouse-it is increasingly becoming an engine for technology innovation. With GenAI moving from pilot to production, cloud strategies maturing, and digital infrastructure projects accelerating at home, the Indian IT services sector is poised for sustained, value-led growth.
The journey ahead will require service providers to balance scale with specialization, standardization with agility, and automation with empathy. The next phase of growth will not be defined by size alone, but by the ability to co-create, co-innovate, and deliver measurable business outcomes.
For an industry that has consistently reinvented itself through global shifts, the momentum in 2024 signals that Indian IT services are not just adapting to the future-they are actively shaping it.