Healthcare drives growth in India’s IT sector
NEW DELHI, INDIA — India’s information technology (IT) sector is experiencing a significant boost from an unexpected source: healthcare. As financial services, retail, and high-tech industries face prolonged challenges, healthcare has emerged as a resilient growth engine for the country’s $250 billion IT industry.
The digital transformation within the healthcare sector is propelling this growth, with IT firms securing numerous small to medium-sized deals that have remained consistent despite broader market fluctuations.
Government funding fuels healthcare tech
Unlike other commercial markets, such as banking, the healthcare tech services market is closely tied to government funding, which has been steadily increasing.
Peter Bendor-Samuel, CEO of Everest Group, highlighted this distinction, stating that the “healthcare tech services market is disconnected from the commercial market like banking. It is more closely related to the government services market.”
He added that government spending has shielded the healthcare sector from economic slowdowns that affect other industries.
Leading IT companies capitalize on healthcare
Major IT firms in India are capitalizing on this trend. Tata Consultancy Services (TCS) has seen its life sciences and healthcare vertical contribute an additional two percentage points to total revenue over the past two years, partially offsetting the slowdown in the banking, financial services, and insurance (BFSI) segment.
Similarly, Infosys reported strong growth in its life sciences sector, with ambitions to increase revenue from $700 million to $2 billion within three years.
Wipro also reported a 7.2% year-on-year increase in health vertical revenue in the first quarter of FY25, marking it as the only vertical among its seven business segments to post growth. This trend underscores the healthcare sector’s role as a stabilizing force within India’s IT landscape.
Smaller firms benefit from healthcare growth
The positive impact of healthcare extends beyond large corporations. Persistent Systems‘ healthcare practice now approaches $100 million per quarter, having grown over 50% year-on-year.
Sonata Software has made strategic investments in its healthcare and life sciences vertical as part of its five-year plan to achieve $1.5 billion in annual revenue, making it one of its fastest-growing units.
Additionally, Coforge‘s acquisition of Cigniti is expected to enhance its presence in the healthcare sector.
Future prospects: Digital transformation leads
The focus on digital transformation within the healthcare industry means that growth is driven by numerous smaller deals rather than billion-dollar contracts.
Pareekh Jain, CEO of engineering insight platform EIIRTrend, emphasized that while billion-dollar deals are rare due to restructuring needs in other sectors, healthcare continues to expand rapidly within both IT and engineering services.
“The priority here is digital transformation, so the growth is driven by a large number of small to medium size deals,” he added.
Overall, India’s IT industry is finding a lifeline in healthcare as it navigates through challenging times for other sectors. With continued government support and an emphasis on digital transformation, the healthcare sector is poised to remain a vital contributor to the growth of India’s IT industry.
