Unlocking Growth and Value Creation for Technology Services in 2024-25

The growth trajectory for the technology services industry has changed considerably in 2023, and along with that the focus has shifted to efficiency with substantial margin improvement. Many of the trends that we had expected at the beginning of 2023 have continued to evolve, e.g., growth in cloud with increased focus on value realization, leveraging the generative AI opportunity, resilient large deals growth, among others.

In this perspective, we examine the current state of the industry, explore shifting trends and drivers, upcoming growth opportunities for 2024-25, and highlight the imperatives for providers to remain competitive in a continually evolving landscape of technologies, customer expectations, and competitive pressures. This document aims to help India's technology industry navigate future challenges and possibilities.

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Key Findings

10+ distinct customer segments constituting ~200 companies, (with total $300 Bn tech spend) growing their tech spend at 10%.
20+ high growth horizontal offerings (including cloud, enterprise apps, cybersecurity, data analytics & AI, ER&D and CX) expected to form ~$350 Bn+ of technology services addressable opportunity.

$150-200 Bn tech spend around re-imagined and native offerings is expected to be driven by Gen AI by 2027
While new deals are factoring significant Gen AI productivity gains, at-scale execution is yet to pick pace.

Continued acceleration in large deals driven by 2X growth in multi-tower deals
Plan for the significant rise in renewal competitive intensity along with continued pressure on large deal margins.

Important to manage partner ecosystems as their influence and contribution to services revenue opportunities increasing.
M&A activity expected to pick up in 2024-25 after a significant drop in deal volumes over the last 2 years and expected correction in valuation.

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