Buoyed by a rapid acceleration in digital transformation service deals, the Indian IT industry is back on the growth track, leaving behind the pandemic’s impact. In its strategic review 2021, titled ‘New World: The Future is Virtual,’ Nasscom estimated the IT industry to clock revenue of $194 billion in FY21, up from $190 billion a year back, registering a growth rate of 2.3% year-on-year. While the numbers may still be well-short of pre-pandemic 6-7% growth levels, Nasscom projections are really encouraging for one of the major industries in India.
The Indian IT industry is also likely to add over 138,000 new hires during the FY2020-21, taking the total employee base to 4.47 million. Much of this new workforce is expected to support the new-age technologies such as artificial intelligence, the internet of things, cloud analytics, automation, DevOps among others.
According to the Nasscom review, the indigenous domestic market, driven by hardware-led demand, continued to show resilience, growing at 3.4% in the year.
“As we look at 2021, while there are positives on the vaccination front and accelerated digitization across verticals, the technology industry in India is well geared to build on these trends and continue its transformation journey in this re-defined techad,” said Debjani Ghosh, President, NASSCOM.
The Indian IT industry is benefitting from the strong demand for digital transformation technology deals from Europe and Asia-Pacific (APAC). Sectors such as BFSI and healthcare are likely to continue to invest significantly in digital transformational technologies in the year ahead. (See: TCS finds its new growth mojo in DX)
A quantum leap for DX initiatives
Nasscom’s assessment is not surprising since the Indian IT industry has shown remarkable resilience in the last year and played a pivotal role in accelerating economic growth, enabling businesses to overcome supply and demand disruptions through digital transformation.
The disruption caused by the pandemic was terrifying for many enterprises as they were inexperienced in managing an upheaval of such magnitude. The crisis left them no option but to fast-track their digital transformation (DX) plans to meet the evolving market needs, interact with customers and employees. The immediate focus was to deploy technology solutions to enable the remote working for their workforce and increase business resiliency.
Indian IT services majors are also making continuous efforts to build new digital transformation capabilities in India and enhancing their focus on delivering more thoughtful, practical solutions to construct agile, integrated, simplified, and customized environments for their customers. This trend is likely to create further opportunities for IT firms to accelerate digital transformation deals in India and beyond through strategic mergers and acquisitions. Notably, in 2020 alone, the industry witnessed 146 M&A deals, 90% of which were digitally focused.
“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% of 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,” says UB Pravin Rao, Chairman, NASSCOM in a media and analyst release.
The impact of the crisis is going to be experienced for a long time. While the rapid vaccination program might pacify the COVID-19 effect by the end of 2021, the enterprise tech leaders in India will continue to rely on the cloud and AI-based contactless technologies to open their physical offices cautiously. (See: CIOs’ digital transformation focus accelerates recovery for IT firms)
Digital transformation in India and the global market will continue to see a significant focus in the year ahead as companies look to accelerate growth, innovate and compete at pre-Covid levels.