At a time when global output is estimated to have shrunk by 3.2 per cent, led by the 2020 pandemic, the Indian Technology sector rallied round to grow at 2.3 per cent year-on-year on the back of acceleration in digital transformation and tech adoption said the industry body National Association of Software & Services Companies (NASSCOM) in its Strategic Review 2021 titled, ‘New World: The Future is Virtual’.
The Indian IT industry body said that the sector is all set to clock revenue of $194 billion for FY2021, an increase of 2 per cent from $190 billion in FY2020. Exports are expected to touch $150 billion for FY21.
Despite a difficult start of CY2020, which saw several players pressure on pricing and contracts, the Indian IT services segment is all set to grow 2.7 per cent to $99 billion. Given a strong recovery in the second half of FY21, the industry body stated that on the back of increased digital focus and tech spending the overall deal pipeline is at a robust $15 billion.
“The year 2020 turned out to be a stress test of our resilience. Many analyst were sure that the Indian IT industry will not be able to come out of this, but we have not only recovered, we have also managed to stay relevant to our clients and have emerged as bellwethers in an economy hit by Covid,” said Debjani Ghosh, President Nasscom.
Despite the downturn, Indian tech industry continues to be a net hirer with significant focus on digital upskilling. The industry is expected to add over 138,000 net new hires in FY2020-21, taking total employee base to 4.47 million in FY2020-21. Digital talent pool is expected to cross 1.17 million, growing at 32 per cent over last year.
Investing in digital continues to rise as an imperative for the industry, with organisations building their capabilities and aligning business models to digital practices–up to 28-30 per cent of the industry revenues was recorded for digital.
The Indian domestic market, driven by hardware led demand continued to show resilience, growing at 3.4 per cent in the year. With an increased focus on innovation, India witnessed more than 115,000 tech patents filed by companies in India in the past five years. The domestic IT industry now accounts for eight per cent of India’s gross domestic product and has a 52 per cent share in services exports from the country, according to Nasscom.
U B Pravin Rao, Chairman Nasscom said, “Digital transformation is the topmost priority for global corporations and in a highly connected world that will remain largely contactless for an extended period, there are shifts in business models, customer experience, operations, and employee experience. Our CEO survey for 2021 indicates that almost 70 per cent companies expect investment in global technology higher than the previous year. In this hyper-digital economy, TRUST with the four cornerstones of competence, reliability, integrity, and empathy, will be the single-most-important currency, leading the industry growth towards a better normal.”
Enterprises are re-balancing their technology spends to prioritize digitization. The industry saw an overall shift of 10 per cent in outcome-based pricing; offshore witnessed more than 4 per cent shift in 2020 and attrition rate dropped by 50 per cent in H2 2020 compared to H1 2020.
The industry had 146 M&A deals in 2020, of which 90 per cent were digitally focused. Companies saw a significant rise of 80 per cent in cloud adoption during H1 FY2021 Vs H2 FY2020. Further, Continental Europe, APAC emerged as one of the strongest growth geographies in FY2021. BFSI & Healthcare were key growth verticals during the year.
Covid-19 has accelerated digital adoption across industries and technology service providers are witnessing a sharp growth in digital deals. The consolidated revenues of top listed technology companies recorded a growth of 5.3 per cent in H2 2020 over H1 2020. Further, with an increase in focus on digital upskilling initiatives revenue per employee grew at 5.5 per cent in H2 2020 as compared to H1 2020.
As per Nasscom’s CEO survey, 97 per cent CEOs anticipate a significantly better global economic growth in 2021 as compared to 2020. In terms of hiring, 95 per cent CEOs expect 2021 hiring to be more than what they hired in 2020. Further, 67 per cent CEOs believe the Indian technology industry to grow significantly higher than 2020.
In the next normal, discussions with CEOs suggest the industry is warming up to a blended work model. 70 per cent of the survey respondents expect to have higher prevalence of remote work along with boost in gig workforce in 2021.