Each year, NASSCOM publishes it’s flagship report – the Strategic Review: The Technology Sector in India – that is considered the bible for the technology industry. This year’s edition focuses on the theme “Resilience to Resurgence” and explores how various stakeholders partnered together to navigate the challenges posed by the pandemic and overcome these successfully. As a result, FY2022 is a tipping point for the industry – the year in which the industry crossed $200 Bn in total revenue and 5 Mn in total workforce. The report examines the driving factors behind this growth via the Trends that Defined FY2022.
It also analyses in detail six global megatrends that have become prominent as a result of the pandemic and how technology is being/can be leveraged to address these areas. With an aim to define the future, the report carries, for the first time ever, NASSCOM’s TECHScope Framework that has looked deep into the top 25 technology that will be key to unlocking value over the next 3 to 10 years. Finally, the report also presents the short-term outlook (FY2023) – a sentiment analysis of both the enterprise (end-user industries) and the technology industry perspectives – both indicate a highly positive outlook for technology.
2021 was a year when the pandemic continued to cast its shadow and impact global economy. IMF’s WEO outlook (Jan-2022) pegged global GDP growth for 2021 at 5.9% in the background of the pandemic, supply chain disruptions, geopolitical tensions, and concerns around inflation. India’s GDP for FY2022 is estimated at 9.2% as per the GoI’s Economic Survey 2021-22.
As a result of the shifts forced by the pandemic, 2021 saw the emergence of six major global megatrends that will refocus policies, strategies, and investments at a global scale, not just in 2022, but for the coming 5-8 years and even beyond. These trends include:
For both global and Indian end-user enterprises, technology was the panacea that enabled firms to not just keep the lights on, but also pivot their business models to online mode, adapt products & services to emerging market forces and customer needs and enable collaboration in a distributed work model.
FY2022 therefore has been a spectacular year of India’s technology industry; it recorded a 15.5% growth (highest ever) to reach $227 Bn in revenue. A combination of Digital and innovation was the industry’s winning formula; Platformisation and XaaS were instrumental in accelerating tech adoption; it was also the year of the start-ups – when Tech start-ups leapfrogging into scale-up mode. The industry doubled down on operational excellence to manage margin pressures; and the eCommerce sector saw the deeper penetration of the O+O model (Offline+Online).
Another landmark that the industry achieved was to cross 5 Mn in total direct workforce, a highest-ever net addition of 445K. The industry’s “people first employee-centric” approach saw tech firms quickly adapt to Hybrid work models and scale up the industry’s digital capacity/capability building programs.
Today, the share of digital to total revenue stands at 30-32% with 1 in 3 employees being digitally skilled stamping India’s position as the Global Digital Talent Nation.
These factors have pushed India’s share in global sourcing market to 59% - a testament to India’s new tech value proposition.
Over the next few years, end user industries (enterprise sector) are expected to contribute $350-400 Bn to India’s dream of becoming a $1 Tn digital economy. As per NASSCOM’s Enterprise CXO Survey 2022, globally, 70% of end-user companies aim to significantly increase their digital investments in 2022.
With an aim to guide future tech investments by both enterprises and technology firms, NASSCOM has included, in this report, its first ever TECHScope framework that has an assessment of 25 technologies that firms should prioritize over the next 3-10 years. These are expected to invite large investments and have a strong impact on the core industry, the value chain, and the overall Indian economy.
To understand the business sentiment for 2022 (FY2023), NASSCOM conducted its annual survey of both end-user enterprises and tech CEOs.
According to the NASSCOM Enterprise CXO Survey 2022, 60% CXOs indicate a 6% higher tech spend in 2022 over 2021, with focus areas around customer service, supply chain and sales & marketing. End-user enterprises are emerging as technology job creators – about 30% of respondents intend to increase their technology team by over 15%.
FY2023 growth estimates for the technology industry reflect the optimism of FY2022. 72% tech CEOs indicate 2022 Tech spend to be in line with 2021 (NASSCOM Tech CEO Survey 2022). R&D investments are expected to grow between 10% and 20% over last year. Most respondents also expect to maintain or grow their hiring in line with last year.
FY2023 growth opportunities: Infrastructure and managed services, consulting; Platform BPM, data management & RPA; ER&D will see deeper penetration of engineering cloud. The software product segment will see greater offtake of productivity software, cybersecurity solutions. Finally, eCommerce industry is set to get further disrupted by the fast-growing interest around metaverse, driven by the need for more personalised experiences.
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