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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

Tech SMEs are diverse, global, and growing

  • 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
Traditional tech SMEs deliver on transformation and cloud demand

  • 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
Digital Tech SMEs have grown four-fold

  • 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
Doubling of digital to drive 2X Tech SMEs revenue by FY30

  • 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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