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Future of Technology Services 2.0 – Reassessing the Outlook

April 7, 2023 2030 0 IT Services

Future of Technology Services 2.0 – Reassessing the Outlook

Technology services industry has experienced unprecedented growth and transformation over the past two years, since COVID-19. Many of the trends that we had noted at the start of 2021, in Future of Technology Services 1.0 (FTS 1.0), have seen an accelerated trajectory, e.g.,growth in cloud and digital, rise in enterprise tech spending, intensification of war for talent, among others. This study, Future of Technology Services 2.0 – Reassessing the Outlook, is a refresh of our perspective by examining the current state of the industry, exploring shifting trends and drivers and highlighting the imperatives for providers to remain competitive in an ever evolving and volatile landscape.

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Key Findings:

  • Between 2020-2022, the tech services industry has tracked along, and in some cases accelerated on, the outlookpresented in FTS 1.0
    • The study tracks how technology intensity has grown due to higher overall tech demand, and particularly demand for digital transformation, between 2020-2022. Tech spend is on track to its targeted 5% of revenue by 2030.
    • The study also assesses the specific areas of spend in terms of growth rates and drivers for accelerated adoption, while also assessing the role that partnerships, talent war, and emerging DTX models will play in the growth rate dynamics
       
  • Tech services growth will return to the pre-pandemic levels, registering a slowdown by 3-4 pp
    • More than 70% CIOs expect economic slowdown in the next 18 months, and nearly a ~15% reduction in discretionary spend. However, key initiatives will continue with reduced scale and scope
    • Consensus analyst estimates indicate that Indian HQ providers will clock 8-10% growth rate in 2023, while the overall tech services market growth is expected to be 4-6%
       
  • Spend priorities for CIOs indicate focus on strengthening the core, with transformation partners becoming more strategic
    • The study has analysis from 200+ CIO conversations on spend priorities in cloud and digital, efficiency-based  cost restructuring, and next-stage vendor strategies for more resilient operations
    • The study also assesses how tech buyers are likely to make sourcing decisions based on integrated use cases, established partnerships, and more strategic value realization
       
  • Future bets are driven by more resilient and integrated technology use cases, and changes to op. models
    • From FTS 1.0, there are certain spend priorities that are likely to continue for the next 3-5 years, while some new priorities have emerged – 30 resilient hotspots that are likely to see 20%+ growth
    • The study goes into provider imperatives that will help achieve efficient, scalable, and resilient growth in 2023

For a lot more details on the Indian Tech SMEs, download the full report.

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