G. Kalyan Kumar
The Indian technology sector is expected to grow at 2.3 per cent year-on-year on the back of rapid acceleration in digital transformation and tech adoption. The industry will also hire over 1,38,000 personnel in FY21, according to trade body NASSCOM.
The gain reflects the resiliency shown by technology firms and startups that made India one of the strongest digital markets despite the disruption by the Covid-19 pandemic.
The new coming fiscal year from April will present a host of opportunities for the Indian tech industry.
Nasscom report signals growth
According to a recent Nasscom report, Indian IT services revenue is set to touch $194 billion by end of FY 20-21, a 2.3 per cent increase from the previous year. The commentary from the Indian IT giants, post their Q3 FY21 results, are positive with large deals and a strong fourth quarter or Q4. For instance, Infosys raised its revenue guidance to 4.5-5 per cent in constant currency terms from the earlier estimated number of 2-3 per cent.
When it comes to startups, Nasscom has earlier reported that more startups are raising their first round of funding in 2020 (nearly 42per cent) as compared to 2019 (around 29 per cent).
CEOs expect higher tech spending
The CEO survey mentions an estimate of a nearly 20 per cent hike in tech spending on digitising the core, enhancing customer experience and redesigning product portfolios. The survey mentions that 60 per cent of CEOs expect larger digitisation deals and recovery of investments in core markets such as BFSI, manufacturing and retail.
The first-time funded startups are more in BFSI, Edu-tech, Agri-tech and Gaming. In 2020, despite the disruption caused by the pandemic, over 12 unicorns had been added to India Inc, per Nasscom report. As far as the large global brands in the IT industry in India, digital transformation will set the tone for the decade ahead.
Optimistic outlook on 2021
In one of the CEO surveys by Nasscom among 100 key CEOs in the tech industry 97 per cent of CEOs expect the global economic growth to be better than 2020, 71 per cent of CEOs expect global technology spend to be significantly higher than 2020 and 67 per cent expect Indian tech industry to grow significantly higher than 2020.
In the words of Nasscom chairman UB Pravin Rao: “The CEO survey for 2021 indicates almost 70% firms expect investment in global technology higher than the previous year.”
Domestic MSME opportunity
The main driver is the digital transformation. While the large IT services brands continue to bag large deals abroad, startups have opportunities within the country by working closely with large companies and offering services/ products to MSMEs.
“In this hyper-digital economy, trust with the four cornerstones of competence, reliability, integrity, and empathy, will be the single-most-important currency, leading the industry growth towards a better normal,” says Rao.
For instance, the demand for deep-tech startups and their services is increasing. In the last five years, 2100 deep-tech startups have come up focused on specific technologies.
Nasscom estimates this pool expanding at a 5-Year CAGR of 41%, faster than the overall ecosystem growth rate. “Encouraging tech and domain-specific professional skills among the talent will be a priority in the next decade for making India a talent nation,” according to Debjani Ghosh, president, Nasscom.
Technologies that startups leverage
AI, IoT, Big Data, Blockchain, AR, VR and 3D printing are technologies where the startups specialise, per a report in the Money Control.
Fintech and health tech startups are seeing a jump in demand for services including digital contactless payments and telemedicine.
Similarly, retail tech startups benefited from the demand for e-commerce, digital payments from small businesses and Kirana stores.
The focus of technology will become more experience-centric.
As a result of surging demand, new-age digital skills in blockchain, AI, IoT, security, AR, VR and data analytics will outstrip supply by FY24, the Nasscom report highlighted.