India’s Tech SMEs: Rising in the Global Digital Arena

Technology industry has 10,000+ SMEs dedicated to providing either traditional or digital solutions to the technology buyers. This subsegment will contribute an estimated $15-20 Bn in FY23 revenues, comprising 7-9% of the overall technology industry in India. This study, India’s Tech SMEs: Rising in the Global Digital Arena, is a first-of-its-kind publication on this crucial segment of the overall tech industry. This study also covers a brief landscape on the state of the tech SMEs in India, their growth trends, digital and traditional tech offerings, and the potential growth outlook through FY30.

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Key Findings

Contribute 7-9% to the technology industry, having grown from 4-6% share pre-pandemic
60-70% are BPO SMEs, followed by IT services at 20-25%, and Software Products and SaaS SMEs at 10-15%
79% SMEs continue to offer traditional IT services
US contributes more than 50% of revenues of the tech SMEs
In India, Tech SMEs are spread across established and growing hubs of tech talent and innovation

Majority revenue of traditional services SMEs comes from legacy ADM, SI, managed services
Nearly 10% of the revenue of traditional SMEs is from digital
SMEs have grown through enterprise partnerships with hyperscalers and systems integrators
Majority clients are SMBs and tech SMEs from regions spread globally

Between FY20 and FY23, digital SMEs have seen 4X growth, most in the midst of the pandemic
Digital SMEs report 1.5X faster growth and margins
Digital SMEs focus on cloud, product engineering services, analytics/AI/ML, IoT and Edge based solutions, and low-code.no-code platforms
Digital talent is a growing share of the overall talent of tech SMEs

SMEs face challenges in the current dynamic macro-economic environment and shift towards digital demand
More focus on enterprise client, GTM strategy, and talent development will prove crucial
By FY30, when the tech sector aims to be a $500 Bn sector, MSMEs are expected to double revenues
This target can be achieved by growing the share of digital SMEs by 2-2.5X

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