Technology Sector in India : Strategic Review - 2024

Technology industry remained resilient in a year of macroeconomic uncertainties as enterprise software and IT services demand sustained large-scale cost optimization and automation deals. Global tech spending grew slower in CY2023, at 4.4% y-o-y, primarily due to degrowth in hardware and devices. Spending increase was primarily driven by enterprise software and IT services spend that grew nearly 1.1X of the total tech spending.

Amid global geo-political tension leading to a more cautious approach for investments and delayed decision making, India’s technology industry revenue (including hardware) is estimated to reach $254 Bn (3.8% y-o-y growth) in FY2024, an addition of over $9 Bn over last year. Exports are poised to touch the $200 Bn mark growing at 3.3% y-o-y, and the Domestic technology sector is expected to cross $54 Bn, growing at 5.9% y-o-y.

Despite the tough market conditions, the industry continues to be a net hirer, adding 60K employees, taking the total employee base to 5.43 Mn (1.1% y-o-y growth). Europe, APAC, Manufacturing, Retail and Healthcare emerge as the key growth markets for the industry.

• Tech remains resilient in times of uncertainty.
• Technology-led transformation of traditional services.
• ER&D remains the poster child for tech services.
• The year AI became omnipresent.
• DeepTech beyond AI.
• India Tech start-ups - Strengthening business fundamentals.
• India continues to be the destination of choice for tech.
• Future of work - focus on ‘skills first’ approach.
• India domestic market growth - a promise of good times.
• Building future readiness through capability enhancements.

Nasscom Annual Enterprise & Tech Services CXO Survey 2024 indicates stronger growth momentum for CY2024 with under-stressed sectors of BFSI, telecom, media and entertainment and hi-tech leading digital spending. Gen AI remains a key priority for over 95% of the organisations over the next 6-12 months.

For technology providers, FY2025 growth expectations look stronger as 79% of the providers expect higher growth compared to last yea. Hiring growth is expected to be positive with 80% of the providers planning higher level of hiring compared to FY2024.

With these changing market dynamics, and to drive India’s tech-led development through 2047, it is imperative for the industry to focus on the following:

• Leading the Gen AI driven services transformation
• Expanding into newer markets
• Transitioning towards outcome-based Service Level Agreements (SLAs)
• Integrating more deeply with academia for adaptive skilling
• Driving the strategic enablement of India@100