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In The Tiger’s Den

The year 2021 is already being touted as India’s best tech year yet, underlining that out-of-the-box and bold moves are now needed, from all stakeholders, to create the next wave that will propel India’s tech economy towards real growth

Photo Credit : Indiapicturebudget


The IT industry accounted for 8 per cent of India’s GDP in 2020 and is expected to contribute 10 per cent by 2025. As per Nasscom, unlocking data & AI alone has the potential to add $500 billion to India’s GDP by then…

According to Software Technology Park of India, software exports by IT companies connected to it stood at Rs 1.20 lakh crore ($16.29 billion) in Q1FY22… 

In the Union Budget 2021, the allocation for the IT and Telecom sector stood at Rs 53,108 crore ($7.31 billion)…

The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth $74.12 billion between April 2000 and June 2021. The sector ranked second in FDI inflows as per Department for Promotion of Industry and Internal Trade…

Indian tech majors such as Infosys, Wipro, TCS and Tech Mahindra are diversifying their offerings and showcasing ideas in blockchain and artificial intelligence (AI) to businesses using innovation hubs and research and development centres to create differentiated offerings…

India is already among the leading contributors to international tech giants such as Microsoft and IBM taking India’s position to that of unprecedented significance on the global map…

These are just some of the many developments and trends observed in the year that prove how India’s tech sector is playing an extremely critical role in growing the country, its businesses and economy, and its people. Technological progress, through its various versions, is deeply embedded in the way people live their lives and businesses conduct their operations. There is a dichotomy of sorts here but the only point it highlights is the headroom for growth. The first data point of this is evident in the very fact that even as 800 million Indians are connected, making India the largest open internet market in the world, according to the Minister of State for Electronics and IT, Rajeev Chandrasekhar, as the rural broadband internet connectivity programme BharatNet starts kicking in and lighting up homes in the villages, India will have “1.5 billion Indians connected to the internet over the next two years”.

Credit Suisse’s March 2021 research of India’s corporate landscape reported an “unprecedented pace of new-company formation and innovation in a variety of sectors resulted in a surge in the number of highly valued and as-yet-unlisted companies”. The report said that against 336 listed companies with $1 billion market capitalisation, there are now 100 unicorns in India with a combined market capitalisation of $240 billion.

India’s Best Tech Year

Irrespective of the data point, it is clear that the Indian tech story is only poised for further growth. “Technology has emerged as the ‘sutradhar’ of every industry and business overall. The IT landscape in India has also leapfrogged with accelerated digital transformation and emerging technologies helping clients take advantage of the data paradigm and reshape standard business models,” says Sandip Patel, MD, IBM India. 

The optimism is well-placed. But the flip side of this is what happens after the basic tech requirements are met and the famous low-hanging fruits are devoured. As businesses were pushed towards digital readiness in the last year, tech majors too realised that the only way to grow the game from here is to keep pushing the anvil and make some bold moves.

Arguably, it is the Indian government that took the lead in this. India’s digital economy is expected to witness a potential five-fold increase to reach $1 trillion by 2025. The key to achieving this will be a connectivity strategy and a roadmap that is aligned towards various personas including the underprivileged and rural India, hence considerations would go far beyond the technological aspects. BharatNet is designed as a step in that direction. Boosted by moves such as Make in India, Digital India, PLI (product-link incentives) schemes that included IT and Telecom both, the government is playing its part in making India an apt alternative to China that went through a major tech crackdown in the year, thereby opening up an opportunity.

“We have got data privacy as a fundamental right. In China, nothing is a fundamental right. So, it helps. Every government-owned company is collecting data and using data for creating AI data sets. We have had that restriction,” says Minister Chandrasekhar, also citing the recently launched Data Protection Bill, which he believes will work in India’s favour in this context. 

This being said, at present, the bill is still attracting debates and discussions. There are also actions such as the Ecommerce Rules of 2021 and its expected tightening that may well be an argument in the opposite direction but observers also comment that some clauses of the rule might boost the Indian businesses. 

Not that Easy

India’s stock market saw somewhat of a frenzied state in the year. Credit Suisse also reported that of the 100 unicorns, the sectoral split is highly diversified but the large representation is of ecommerce, financial technology, education technology, food delivery, and mobility companies. “Furthermore, there is a rapidly growing number of firms in industries such as Software-as-a-Service (SaaS), gaming, new-age distribution and logistics, modern trade, biotech, and pharmaceuticals. Even fast-growing consumer brands have benefitted from accelerating internet penetration and formalisation of sectors,” the report quoted.

Many industry observers cautioned against this, some even calling it fool’s gold. Vindication for this side of the argument came in the Paytm IPO, when the stock saw one of the worst opening days for a major tech listing since the dot-com crash, casting aspersions on a record-breaking run for Indian equities perse. The stock did recoup some of its initial losses but has remained below its issue price.

The Indian tech leaders however have other concerns keeping them busy. Most common and notable among these is identifying the areas of growth that have a sure-shot chance of making the sector rise higher and perform better in the time to come. Some usual suspects continue to make this list, as the growth potential from these has only just begun. Data, Cloud, 5G, AI & blockchain are among these. 

Yes, Still About Cloud

“The future of industry is ‘intelligent’. Today, we are at the cusp of the next stage of digital transformation – the Intelligent Industry. It is the age of intelligent value chains with new ecosystems, offering a vast range of new potential products and services for businesses. In the world of the Intelligent Industry, the rapid development of disruptive technologies such as AI, 5G, cloud, edge computing, or IoT means every enterprise can, and should, do business in a new way,” observes Ashwin Yardi, CEO - India, Capgemini.

Indian public technology companies revenues increased 4.5 per cent sequentially and 17.8 per cent annually, with digital and cloud remaining the major drivers, according to Nasscom, and companies are expected to grow in double digits going forward.

“Today, the cloud democratises AI. In the journey from AI experimentation to wide-scale deployment and industry transformation, IBM has made Watson portable across any cloud, empowering businesses to prevent vendor lock-in and start deploying AI wherever their data resides in a secure manner. Most of the organisations in India are looking to deploy AI as part of their enterprise-wide functions,” adds IBM’s Patel. 

He cites the example of banking and financial services as a sector that is heavily investing in AI for automating processes. Telcos that are witnessing heavy customer care volumes are looking at AI to triage and auto-respond to voice calls. Industries where customer influx is high include digitalization and touchless interaction with their customers, pushing them to look at ways to reduce manual intervention to a minimum to enable employees to focus on higher-value work. 

5G, Not Just the Next Big Thing

“5G is not just an incremental improvement over 4G; it is a quantum leap forward that is expected to enable a vast range of powerful and new use cases while providing top-notch internet connectivity to everyone,” asserts Som Satsangi, Managing Director, Hewlett Packard Enterprise. 

In a growing economy like India with a great digital divide, the deployment of 5G will disrupt the day-to-day lives of people, transform sectors and promote greater inclusivity. It will impact people from all walks of life, generating massive benefits for everyone on both sides of India’s digital divide – and ultimately help close the gap between the haves and have-nots. Early stages of 5G adoption in India will see sectors such as manufacturing, energy and utilities, smart cities, public safety, and transport transforming varied aspects of their businesses to unleash the true potential of this technology.

The IT & Business Process Management (BPM) industry’s revenue is estimated at $194 billion in FY21, an increase of 2.3% YoY. The domestic revenue of the IT industry is estimated at $45 billion and export revenue is estimated at $150 billion in FY21. According to Gartner estimates, IT spending in India is estimated to reach $93 billion in 2021 (7.3% YoY growth) and further increase to $98.5 billion in 2022. The BPM sector in India currently employs around 1.4 million people, while IT and BPM together have 4.5 million workers, as of FY21.

Indian software product industry is expected to reach $100 billion by 2025. Indian companies are focusing to invest internationally to expand global footprint and enhance their global delivery centres. In line with this, in February 2021, Tata Consultancy Services announced to recruit 1,500 technology employees across the UK over the next year. 

The data annotation market in India stood at $250 million in FY20, of which the US market contributed 60% to the overall value. The market is expected to reach $7 billion by 2030 due to accelerated domestic demand for AI.

“Industry experts avow that 5G is a revolution in the networking space. With the potential to bring 100 times improvement in network traffic and efficiency, it is a true gigabit technology. With promises of zippier connectivity and zero lag performance, the potential of a fully realised, commercial 5G is immense and disruptive. It can enable significant strides in the Internet of Things (IoT), autonomous operations, digital reality, and even future breakthroughs we haven’t even thought of yet. We believe 5G is the future enabler of critical communications services, digitisation, and automation for various sectors of the world,” notes Ankit Agarwal, Managing Director, Sterlite Technologies.

5G will champion the cause of providing a superior experience for mobile network customers with its 100 gigabits per second speed and under 1ms latency. Moreover, early adopters of this technology can experience the first-mover advantage and can deliver a next-gen experience to users. 

The Sun Shine Sectors

While it would be hard to say that there are sectors that have not been impacted by the advent of technology-led transformation, it is true that in some sectors, the trend lines are more conservative and they take longer periods to show change. This includes sectors such as energy and sustainability in India. Consequently, these also become the sunshine sectors that will continue to keep the demand for tech intensity on the rise in days to come as these sectors catch up to technological growth.

India’s ability in technology will also be seen in its opportunity to leapfrog.  This will not be too different from what was seen in the internet or digital adoption in India, where the country directly jumped into the broadband and mobile data, many markets not even witnessing the dialup phase, for example. This leapfrogging will continue to impact the likes of the healthcare and education sector, where it must be noted that healthtech and edtech are still lesser than 1 per cent of the overall sector’s pie, reiterating the work that still needs to be done in these otherwise older areas. 

Some of the other sectors poised for change will include large sectors like agriculture, infrastructure and newer sectors such as space. The action in these are expected to continue in the near future.

Govt: Leading The Change

"Apart from connectivity, we are becoming leaders in leading-edge public services. Prime Minister (Narendra Modi) is keen to accelerate the digitisation of the government and MSME at a faster rate. The demand for digital products like tablets and laptops which has been flat for several years is also going to increase,” says Minister of State for Electronics and IT, Chandrasekhar, adding that India is the largest consumer of data and is among the fastest-growing.

In August, the Union Minister of State for Electronics and Information Technology announced that the IT export target is set at $400 billion for March 2022. In addition, the central government plans to focus on areas such as cybersecurity, hyper-scale computing, AI and blockchain.

Just before that, in July, the Ministry of Heavy Industries and Public Enterprises launched six technology innovation platforms to develop technologies for globally competitive manufacturing in India. Developed by IIT Madras, the six technology platforms included Central Manufacturing Technology Institute, International Centre for Automotive Technology, Automotive Research Association of India, BHEL and HMT in association with IIScBanglore.

The next challenge for India is around how data sets can be used, and also towards skilling and creating the right talent. The Indian government inaugurated five National Institute of Electronics & Information Technology (NIELIT) Centres, in three North-Eastern states to boost the availability of training centres and employment opportunities. Similar steps have been taken across the nation. The government has also encouraged initiatives by players such as Microsoft and IBM towards skilling India’s workforce and younger talent.

India’s tech sector is all ready to get the cubs in the tiger’s den, making bold bets and big moves, identifying and facing potential challenges to ensure a growth path is well set.