Despite Global Headwinds, India’s Tech Industry Shows Steady Growth
The Indian technology sector is expected to reach $245 billion in FY23, according to the latest estimates by industry apex body Nasscom. This represents an incremental net revenue addition of $19 billion and steady growth, even though the current financial year reported a 2% cross-currency impact. The growth has been witnessed across all segments of IT services, business process management, software products, engineering research & development (ER&D), and domestic market.
Optimism for FY24
There is a “cautious optimism” for FY24, according to Nasscom. While the growth in the sector has been steady, the global headwinds continue to affect the industry. However, the industry apex body is confident that the Indian tech industry is on track to hit $500 billion by 2030.
Krishnan Ramanujam, the chairperson at Nasscom, stated that the Indian technology sector has had another year of growth in FY23, which has created a positive impact for the country and all stakeholders. Despite global challenges and a slight moderation in demand, the industry’s value proposition of resilience, agility and being a transformation partner for global enterprises has allowed the sector to consolidate its leadership position in both core and emerging areas.
Indian Services Export Revenue Expected to Reach $194 Billion
It is anticipated that the revenue from Indian services exports will reach $194 billion in reported currency, representing a growth of 9.4% as compared to FY22. This expansion in the Indian tech industry showcases the durability of the Indian economy, which maintains its position as the fastest-growing large economy globally.
India’s digital infrastructure has been instrumental in promoting the adoption of technology within the country. Ongoing investments made by both the government and enterprises in emerging technologies have helped India’s domestic sector to become a major driver of growth. The domestic revenue has shown a remarkable 13% increase from FY22 in rupee terms, primarily due to a significant rise in digital spending by Indian enterprises.
Growth Across Sectors and Markets
Debjani Ghosh, president of Nasscom, stated that the Indian technology industry’s growth has primarily originated from key sectors and markets like the US, Asia Pacific, BFSI and manufacturing. However, comparatively lower growth has been observed from Europe, travel, and utilities.
India continues to be a global talent hub, with the tech industry being the primary employer, with over 5.4 million workforce, which created 290,000 new jobs in FY23. The industry boasts a digitally skilled workforce of 36%, making it the leader in artificial intelligence skills penetration and the second-largest talent pool globally for artificial intelligence, machine learning, and big data analysis. Furthermore, India ranks third in terms of the installed supply of Cloud professionals.
Deep Focus on Diversity in the Workplace
During the year, the industry demonstrated its strong emphasis on workplace diversity by adding over 140,000 women employees, bringing the total number of women employees to 2 million.
Ghosh stated that the tech industry in India is concentrating on investing in growth in the current abnormal environment. The industry is moving forward with the support of future-oriented policies, effective governance, skilled personnel and digital trust, ensuring accessibility, privacy, security and dependability. The industry is on target to boost its growth to $500 billion by 2030.
Deep Tech Innovation Capabilities and R&D
Over the years, India has become a dominant player in deep tech innovation capabilities and research and development, dedicated to driving growth and innovation for global companies. The presence of Global Capability Centres (GCCs) has significantly contributed to India’s position as a preferred destination for engineering R&D. Presently, about 40% of global GCCs are located in India, highlighting a massive opportunity for the country to expand. During the year, India welcomed 65 new GCCs, bringing the total to 1,570+.
The percentage of digital technology in the total revenue of technology services has increased to approximately 32-34% in FY23 from around 26-28% in FY20. Analytics, cloud and cybersecurity are the fastest-growing segments in digital technology, with cloud deals reportedly four times higher than pre-pandemic levels.
In FY23, India has also emerged as a center of attraction for deep tech startups, with the total number reaching 3,000. During the year, India added 1,300 new startups and 23 new unicorns, bringing the total number to 54. According to Nasscom, the number of unicorns in India is expected to double over the next 2-3 years.
The Indian technology sector is on track to hit $500 billion by 2030, according to estimates by industry apex body Nasscom. The industry has shown steady growth despite the global headwinds, with the current financial year, FY23, reflecting an incremental net revenue addition estimated at $19 billion. The growth has been across segments of IT services, business process management, software products, engineering research & development (ER&D), and the domestic market. India’s digital infrastructure has played a key role in driving domestic tech adoption, with continued investments by the government and enterprises in emerging technologies.
Despite some moderation in demand, the industry value proposition of resilience, agility, and a transformation partner for global enterprises has enabled the industry to strengthen its leadership in core and emerging areas. The growth came from core sectors and markets such as the US, Asia Pacific, BFSI, manufacturing, healthcare, while lower growth was registered from Europe, travel, and utilities.
India’s tech industry continues to be a major employer globally, providing employment to over 5.4 million individuals and creating 290,000 new jobs in FY23. With 36% of its workforce being digitally skilled, the industry is leading in artificial intelligence skills penetration and has the second-largest talent pool globally for artificial intelligence, machine learning, and big data analysis. Additionally, the industry ranks third in terms of installed supply of Cloud professionals.
The industry showcases a deep focus on bringing diversity to the workplace, reporting a net addition of over 140,000 women employees during the year. Nasscom predicts cautious optimism for FY24, with the industry focusing on investing for growth propelled by forward-looking policies, strong governance, talent, and digital trust to ensure accessibility, privacy, security and reliability.
