Technology Sector In India 2022- Resilience to Resurgence/ Strategic Review

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Technology Sector In India 2022- Resilience to Resurgence/ Strategic Review

February 16, 2022 7294 1 nasscom Insights BPM Digital Transformation Industry Trends IT Services nasscom insights

Each year, NASSCOM publishes it’s flagship report – the Strategic Review: The Technology Sector in India – that is considered the bible for the technology industry. This year’s edition focuses on the theme “Resilience to Resurgence” and explores how various stakeholders partnered together to navigate the challenges posed by the pandemic and overcome these successfully. As a result, FY2022 is a tipping point for the industry – the year in which the industry crossed $200 Bn in total revenue and 5 Mn in total workforce. The report examines the driving factors behind this growth via the Trends that Defined FY2022. It also analyses in detail six global megatrends that have become prominent as a result of the pandemic and how technology is being/can be leveraged to address these areas. With an aim to define the future, the report carries, for the first time ever, NASSCOM’s TECHScope Framework that has looked deep into the top 25 technology that will be key to unlocking value over the next 3 to 10 years. Finally, the report also presents the short-term outlook (FY2023) – a sentiment analysis of both the enterprise (end-user industries) and the technology industry perspectives – both indicate a highly positive outlook for technology.

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Key Findings

Emerging Global Megatrends

2021 was a year when the pandemic continued to cast its shadow and impact global economy. IMF’s WEO outlook (Jan-2022) pegged global GDP growth for 2021 at 5.9% in the background of the pandemic, supply chain disruptions, geopolitical tensions, and concerns around inflation. India’s GDP for FY2022 is estimated at 9.2% as per the GoI’s Economic Survey 2021-22.

As a result of the shifts forced by the pandemic, 2021 saw the emergence of six major global megatrends that will refocus policies, strategies, and investments at a global scale, not just in 2022, but for the coming 5-8 years and even beyond.

Key Facts

12-14% - Growth in Global Sourcing 2021
$700 Bn – Global sharing economy potential by 2025
$12 Tn+ – Global Tech4Good opportunity by 2030
$35 Tn+ – Global ESG assets under management in 2021

India Annual Technology Performance FY2022

For both global and Indian end-user enterprises, technology was the panacea that enabled firms to not just keep the lights on, but also pivot their business models to online mode, adapt products & services to emerging market forces and customer needs and enable collaboration in a distributed work model.

FY2022 therefore has been a spectacular year of India’s technology industry; it recorded a 15.5% growth (highest ever) to reach $227 Bn in revenue. A combination of Digital and innovation was the industry’s winning formula; Platformisation and XaaS were instrumental in accelerating tech adoption; it was also the year of the start-ups – when Tech start-ups leapfrogging into scale-up mode. The industry doubled down on operational excellence to manage margin pressures; and the eCommerce sector saw the deeper penetration of the O+O model (Offline+Online).

Key Facts

~$227 Bn – India’s FY2022 technology market; Add $100 Bn+ over the last decade
59% - India’s share in global sourcing
30-32% - Share of digital in tech revenue
5.1 Mn – Total industry workforce; record net addition in FY2022: 445K

Furthering the Digital Transformation Acceleration Imperative

Over the next few years, end user industries (enterprise sector) are expected to contribute $350-400 Bn to India’s dream of becoming a $1 Tn digital economy. As per NASSCOM’s Enterprise CXO Survey 2022, globally, 70% of end-user companies aim to significantly increase their digital investments in 2022.

With an aim to guide future tech investments by both enterprises and technology firms, NASSCOM has included, in this report, its first ever TECHScope framework that has an assessment of 25 technologies that firms should prioritize over the next 3-10 years. These are expected to invite large investments and have a strong impact on the core industry, the value chain, and the overall Indian economy.

Key Facts

~$350-400 Bn – Potential contribution of end user industries to India’s $1 Tn digital economy
70% – Companies aim to significantly increase their digital investments in 2022
125+ Potential high-impact solution areas that companies plan to undertake by 2035
25 - Top technology themes identified as part of NASSCOM’s first TECHScope index

Annual Outlook 2022-23

To understand the business sentiment for 2022 (FY2023), NASSCOM conducted its annual survey of both end-user enterprises and tech CEOs.

According to the NASSCOM Enterprise CXO Survey 2022, 60% CXOs indicate a 6% higher tech spend in 2022 over 2021, with focus areas around customer service, supply chain and sales & marketing. End-user enterprises are emerging as technology job creators – about 30% of respondents intend to increase their technology team by over 15%. FY2023 growth estimates for the technology industry reflect the optimism of FY2022.

Key Facts

Enterprises expect to spend 10% higher on technology in 2022
15% – Increase in enterprises’ tech team size
72% - Tech firms indicate revenue growth of FY2023 to be similar to FY2022
10-20% - Higher R&D spend by tech firms expected

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