The Indian economy is observing a slow but steady growth trajectory this year. Additionally, the government relaxation of foreign investment in certain sectors such as insurance, infrastructure, telecommunications will provide additional funds for business and IT leaders to accelerate their digital transformation journey. Though lessons from 2020 and increased certainty of businesses are not expected to reduce cost optimization efforts the companies are undertaking, CIOs are expected to complete the digital business plans that are aimed at enhancing, extending, and transforming their company’s value proposition for the rest of the year.
The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55% market share of the US$ 200-250 billion global services sourcing business in 2019-20.
The IT industry accounted for 8% of India’s GDP in 2020. Exports from the Indian IT industry are expected to increase by 1.9% to reach US$ 150 billion in FY21. In 2020, the IT industry recorded 138,000 new hires.
The latest forecast expects IT spending in India to touch US$93 billion in 2021, driven by the digitization of businesses outside of technology. Despite an increase of 7.3% compared to last year, India’s spend will be lower than the global average, as worldwide IT spending is projected to total US$4.1 trillion in 2021, an increase of 8.4% year-on-year (YoY). While the world IT spending forecast expects devices (14%) and enterprise software (10.8%) to lead the growth with organizations looking at spending on innovation, ease, and productivity of the workforce, Cloud is expected to drive the majority of the expected software growth in India this year.
IT no longer just supports corporate operations as it traditionally has, but is fully participating in business value delivery. Not only does this shift IT from a back-office role to the front of the business, but also changes the source of funding from an overhead expense that is maintained, monitored, and sometimes cut, to the thing that drives revenue.
The Data Centre Systems segment will see approximate spending of US$3,559 million, a 4.3% YoY increase, while the Enterprise Software segment will see nearly US$7,713 million spent, a 13.3% increase over last year. The devices segment which took a knock in 2020 seeing a decline of 15.2% in spending is also expected to increase from US$32,213 million in 2020 to US$34,692 million in 2021, an increase of 7.7%. Similarly IT services will also see nearly a 9% increase in spending of around US$16,793 million.
Market Size of IT Sector in India
The IT & BPM industry’s revenue is estimated at ~US$ 194 billion in FY21, an increase of 2.3% YoY. The domestic revenue of the IT industry is estimated at US$ 45 billion and export revenue is estimated at US$ 150 billion in FY21.
The Indian software product industry is expected to reach US$ 100 billion by 2025. Indian companies are focusing to invest internationally to expand their global footprint and enhance their global delivery centers.
The data annotation market in India stood at ~US$ 250 million in FY20, of which the US market contributed ~ 60% to the overall value. The market is expected to reach ~ US$ 7 billion by 2030 due to accelerated domestic demand for AI.
IT services with US$99 billion had the largest market size among the various sectors of the Indian IT market in the fiscal year 2021. The total market size of the Indian IT market, including e-Commerce, is US$235 billion. This did not include the hardware sector. On a year-over-year basis, the market grew by over 2% in the fiscal year 2021.
Indian IT’s core competencies and strengths have attracted significant investment from major countries. The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth US$ 62.47 billion between April 2000 and September 2020. The sector ranked 2nd in FDI inflows as per the data released by the Department for Promotion of Industry and Internal Trade (DPIIT).
Leading Indian IT firms are diversifying their offerings and showcasing leading ideas in blockchain and artificial intelligence to clients using innovation hubs and research and development centers to create differentiated offerings.
Some of the major initiatives taken by the Government to promote the IT and ITeS sector in India are as follows:
- India’s Ministry of Home Affairs and the National Critical Information Infrastructure Protection Centre are working on a new national strategy to strengthen the country’s cyber-security amid allegations that Chinese intrusions may have affected operations at a key stock exchange and supply of electricity in Mumbai.
- In Budget 2021, the government has allocated 53,108 crores (US$7.31 billion) to the IT and telecom sectors.
- Department of Telecom, Government of India and Ministry of Communications, Government of Japan signed an MoU to enhance cooperation in areas of 5G technologies, telecom security, and submarine optical fiber cable system.
- In 2020, the government released “Simplified Other Service Provider” (OSP) guidelines to improve the ease of doing business in the IT Industry, Business Process Outsourcing (BPO), and IT-enabled Services.
Advantage of India
- COMPETITIVE ADVANTAGE
- India has a low-cost advantage by being 5-6 times inexpensive than the US.
- A preferred destination for IT & BPM in the world, it continues to be a leader in the global sourcing industry with a 52% market share (as of FY20) in services exports from the country.
- GROWING DEMAND
- Strong growth in demand for export from new verticals.
- Rapidly growing urban infrastructure has fostered several IT centers in the country.
- India‘s IT sector market is projected to reach US$100 billion by 2025.
- IT spending in India is projected to increase by 6% to reach US$81.9 billion in 2021.
- GLOBAL FOOTPRINTS
- Indian IT firms have delivery centers across the world.
- IT & BPM industry is well-diversified across verticals such as BFSI, telecom, and retail.
- Increasing strategic alliance between domestic and international players to deliver solutions across the globe.
- PUBLICLY SUPPORT
- In Union Budget 2021, the allocation for the IT and telecom sector stood at 53,108 crores (US$ 7.31 billion).
- India’s Ministry of Home Affairs and the National Critical Information Infrastructure Protection Centre are working on a new national strategy to strengthen the country’s cybersecurity.
Data Management 2021: Trends & Technology
In the wake of a pandemic that has caused severe economic impact and social devastation with countless lives being lost, we are now seeing an unprecedented acceleration of moves towards digitalization. Along with concepts like work from home, virtual conferencing, and online retailing, a significant initiative we’re seeing from enterprises is the adoption of cloud services.
With the rapid worldwide adoption of cloud services in 2020, according to Gartner, end-user spending on public cloud services is forecast to grow by 18.4% in 2021 to a total of US$304.9 billion, up from US$257.5 billion in 2020. 70% of organizations using cloud services today plan to increase their cloud spending in the wake of the disruption caused by COVID-19. In India, according to IDC, as a result of the spread of COVID-19, 64% of organizations were expected to increase demand for cloud computing, while 56% anticipated a need for cloud software to support the new normal.
This year, the Data Cloud has emerged as the backbone of the data-driven, app-based tech ecosystem that has been vital in helping manage this change. Throughout 2021, we can expect to see the rate of this change accelerate as more businesses get to grips with adopting cloud models. Here are some of the trends which will play key roles over the course of 2021:
- Rise of the Data Cloud: Organisations are increasingly utilizing data analytics through the use of the Data Cloud, delivering benefits in the areas of strategy and business efficiency. Rather than relying on outdated on-premise technology, businesses are using integrated cloud platforms that support many different workloads to improve business agility and shorten response times. In 2021, the Data Cloud will be used to meet growing business demand for richer insights into customer behavior. Businesses will take advantage of these additional data sets and combine them with their existing data. The platform also offers both elasticity to manage changing customer demands and enhanced data governance, so that a business has a clear sight of where its data assets reside.
- Data Governance: As the amount of customer data being collected and used increases in 2021, businesses need to ensure privacy and governance requirements are being adhered to. Customers will want to know what details about them are being collected and where they are being stored. It is vital to have a well-structured data policy in place to ensure the right employees are getting access to what they require. Customers will quickly lose faith in a business if they know their personal details are readily accessible by anyone who cares to look.
- Collaboration Goes Mainstream: This new working environment will also fuel a growing demand for data external to an organization, through a wider connected network of data-sharing technology. Having an acute awareness of data from the entire business ecosystem including partners, customers, third parties, and the wider industry will be key.
- Every Application becomes a Data Application: Most applications today process large volumes of data to deliver value and the greatest share of engineering time, energy, and dollars goes into handling undifferentiated operations. Customers will look for a platform to simplify developing data-intensive applications, scale cost-effectiveness, and deliver real-time analytics.
- Data Security: COVID-19 has completely shifted the notion of location, and with it, how security will be viewed in the year ahead. No longer is the corporate network the main point of security, but now with a large number of users telecommuting from home, identity will become the primary layer for improved security. Identity will truly become the new perimeter, enabling organizations to make deeper decisions about who a user is and what they should have access to; they are no longer bound by location. To support this, multi-factor authentication will become more advanced to better understand someone’s identity, including what systems a user should have access to.
India has the largest working population in the world. More than 62% of the country’s population is aged between 15 and 59. Whilst, 54% is below 25 years. However, finding a skilled person for a job is a struggle for the recruiters. India will struggle to find skilled techies for 230,000 jobs in the Big Data and Artificial Intelligence domain in the future. By 2021, this shortage is likely to rise to 780,000 vacant job posts. In this situation, individuals learning new-age skills will have an advantage over their peers. Companies engaging their existing workforce in reskilling programs will put themselves ahead in battling the skill shortage in the Indian market.
Skill Development in IT Sector
By 2030 Indian will have more than 90 million people joining the workforce due to its existing demographic dividend. India will become the largest workforce in the world by 2030. Indian IT giants have been investing over INR. 1,000 Crore per year to address the reskilling/ upskilling requirements of their employees given the magnitude of the challenges.
Keeping this in mind the Government had made a strong commitment to driving skilling at a scale of our citizens and youth. The Government of India had announced the Future Skills Initiative in February 2018 in Hyderabad to reskill the IT industry workforce in emerging technologies and job roles. It is phenomenal to see the Government taking on such a huge initiative and recognizing the imperative of skilling in our industry today. The common objective we share is to showcase India as the global hub for talent development in emerging technologies as well as globally recognized process structures. This initiative will significantly contribute to building a future-ready workforce and accelerate the technology sector in achieving its skilling targets for the country. The Ministry of Electronics and IT and NASSCOM have worked with the IT industry to reskill/ upskill over 200,000 IT employees leveraging the Future Skills platform. The Future Skills platform currently offers reskilling/ upskilling in 10 emerging technologies like Artificial Intelligence, Cyber Security, Blockchain, etc. across 70 new job roles and 155 new skills. The Government is committed to working with the IT Industry and NASSCOM to create IIndia’sDigital Talent Stack that will propel India into a leadership position in the digital world. With the aim to upskill/reskill over 4 lakh IT professionals in emerging technologies, Future Skills PRIME will be one of the largest government-led digital skilling initiatives globally.
Due to enhance the IT skill development initiatives to generate skilled manpower. “All the skilling initiatives taken by various states and central government should inculcate digital skills amongst MSMEs. Through this, they can optimize their web presence and launch their products on a digital platform.
The theme of the proposal owes its genesis to the inescapable requirement in setting up – IT Smart City in the country. It will not only offer both domestic & international industries a platform to exploit current and emerging technologies to develop state-of-art modern technology & solutions to meet multiple innovative technologies for various industries but also to create a potential export HUB to export IT products to meet global needs as well.
The Smart City can hold huge economic assets: world-class technology developing center, deep pools of labor, large markets, and extensive communication infrastructures. From making large-scale, IT Smart City, affordable and luxury homes, to acres of meticulously planned IT parks to lavish commercial spaces, continues to raise the bar with world-class construction and planning.
Apart from various private entrepreneurs can also be encouraged to open IT-related commercial activities by implementing SECURED GOVERNANCE methodology. This HUB would boost India’s vibrant economy as it will have revenue from not only the export and import of IT software products.
SKILL DEVELOPMENT – Academia-Industry Synchronization – A Necessity of the New Normal
As the population of India exploded, the rapid proliferation in the number of engineering education institutions in the country followed. This created immense opportunities for aspiring children to realize their goal of becoming engineers and enhance household income potential. While this situation enabled access to education, hitherto restricted, this has also contributed to creating a problem as well.
Academic Institutions in India have been established to service the current and emerging needs of the Technology Industry and there is a big onus on the Industry and Education Sector to align curriculum to address Pain Points of the Industry. Industry relevance in the emerging opportunity in the Post Pandemic New Normal a sine qua non for Universities in India – a country that churns out a record number of engineers every year and employability of many of these students is becoming increasingly getting difficult. Industry-relevant programs in Data Science/ Artificial Intelligence, IOT, Cybersecurity are some of the growth areas that Industry-Academia can impart greater focus on for better employability and better salary benefits for students. Some of the areas of great market opportunity and use cases to look at are suggested in this section. Right curriculum, Lab/Digital Infrastructure for research, and active collaboration with Foreign Universities and Technology Platform Majors like Microsoft, Google, AWS and IBM, and Sectors in Industry are ways to go forward with relevant initiatives. The market-relevant opportunity ahead in AI and IOT is called out in this article.
The AI Opportunity
IDC surveys have pointed to nearly 67% of organizations globally adopting or planning to adopt AI and many adopters have seen returns exceeding/ meeting expectations. This can translate to CAGR for AI spending moving to 50% or more in US and APAC markets.
As the human element becomes increasingly important, language and vision models now allow computers to infer meaning and intent and this creates opportunities that go well beyond transforming businesses. AI solutions can be deployed to enrich/enhance the quality of life. A 2017 report from market research firm Tractica forecasted that annual worldwide AI software revenue to increase to US$89.8 billion by 2025.
- In the Healthcare sector, uses include enabling doctors and healthcare providers to be more efficient and transcends to making the lives of patients better with proactive and precise care.
- Genetic engineering technology will grow as computer speeds increase. DNA sequencing technologies and advanced analytics will improve agricultural production, reduce reliance on fossil fuels and extend human life expectancy.
- In the Financial Services sector, AI leveraging data, advanced analytics, and predictive models to offers personalized products, prices and conditions, risk analytics, fraud prevention, and prescribing the next best action for supporting a customer.
- In Manufacturing, AI enables organizations to optimize supply chains and production operations, engage their customers in powerful new ways, transform services and products, and empower employees through customer insights.
- In the Government sector, AI can enable better land use classification models to track urbanization, deforestation, loss of wetlands, and other major environmental trends using periodically collected aerial imagery contributing to better insights and planning around zoning, regulation, compliance, and enforcement.
The IoT Opportunity
IoT is a relative newcomer to the technology landscape but is already making its presence felt. IoT is a booming market growing at an incredible pace. Research published by Zinnov estimates IoT expenditures will increase to US$500 billion in 2023. Some Technology majors forecast that it can become a US$14 trillion industry by 2030. Research points out Government, Technology Industrial Manufacturing, and Automotive/Transportation as the areas where the major IoT spend and opportunity currently resides, with manufacturing outpacing other industries by a huge margin. In devices terms, over 9 billion devices are currently connected to the internet and that number is estimated to grow between 50 billion to nearly 1 trillion in the next decade – The Opportunity herein is Huge!
- In Manufacturing IoT solutions can be used to improve equipment downtime, Predictive Maintenance, and Remote Monitoring.
- In the Transportation sector, Feet management (predictive and monitoring maintenance), Optimizing business routes by monitoring, Enhancing traffic infrastructure, and easing overall congestion.
- In the Smart Cities sector, IoT is an enabler of safer cities, by regulating traffic, ensuring efficient emergency response times, improving service efficiency (identifying broken street lamps, optimizing garbage truck routes, etc.
- In the Retail sector, the effectiveness of store layout, product presentation, and forecast inventory can be enabled with IoT. Smart shelves, beacons, digital kiosks, and mobile apps are a reality in Retail to sustain customer satisfaction, effectively allocate staff, and improve operational efficiency.
- IoT is the direction forward in the Healthcare sector with Remote Patient Monitoring leveraging wearable sensors, improving efficiency by tracking and managing supplies, monitoring, providing equipment with proactive maintenance, ensuring maximum patient comfort.
Ways to Improve IT Infrastructure Management
Improving the infrastructure helps to improve agility, reduce time, effort, and cost to manage the IT infrastructure internally. Simplifying equipment and processes will help to better identify weaknesses and necessary improvements in the infrastructure. There are a few important practices that simplify the management of the IT infrastructure of an organization and improve its efficiency.
- Implementing virtualization (creating a virtual version of something) to increase efficiency
- Backing up data to the cloud, to prevent major data loss due to unexpected failures
- Creating a ticketing system to streamline submissions and keep track of the status of issues reported by end-users
- Monitoring backup reports for any signs of malicious activity
- Investing in cloud services that allow the company to easily scale up or down as demands and technology change.
Secured Governance for IT Infrastructure
The concept of IT HUB is derived in tune from Secured Governance through a revolution that requires upturning all the procedures evolved through years of efforts and experience. It realizes the tools for bringing about effective and sustainable changes in the system. The methodology has been evolved through hands-on experience in dealing with the industry and governmental system. When identifying and determining development potential within an economy a set of criteria is required against which to evaluate whether the effort being undertaken possesses development potential or not. The set of criteria serves as an evaluation tool to identify areas with potential for development and opportunities within each of the local economic sectors.
The IT HUB will provide innumerable benefits in the following way:
- The HUB supports production networks through its world-class infrastructure, where business facilities are supported by comfortable lifestyle amenities in the trade zone, and where the ‘green concept’ weaves through the perfect blend of business and social infrastructure throughout the Information Industrial Park;
- IT HUB will offer a common platform on which the communication enterprises and the telecom industries will be clubbed as one of India’s biggest embedded software/hardware development bases.
- It will introduce new enterprises, Mobile application Development companies, Data Centres, Cyber Security Research Centre, Telecom research and Innovation Centre, Mobile VAS providers, Customer Premise equipment Manufacturers, Telecom Engineering and Training Institutes and Centres, Network Equipment & Fibre Optics Manufactures, Mobile Tower Manufactures and Service Provides, etc. all in one place. Seeking attractive foreign investment and fixed asset investment.
- Government can look to IT HUB to power its investment and growth and help boost employment, manufacturing, and services in the security domain;
- The competitive high-tech IT HUB supported by leading projects and enterprise groups will attract huge foreign direct investment (FDIs) for the security industries to help the government earn substantial revenue.
Advantages of Implementing IT HUB
- Using it is domain expertise can play an important role in building IT / Nano‐IT HUBs exploiting its infrastructural strength and existing facilities;
- Investors with their expertise in specific telecom related field could be invited to work on a revenue-sharing model in collaboration with private parties;
- Once successful and a viable Tele / Nano‐IT HUB is established there can be replicas of this successful model for all over India. This would set an example of others to follow;
Today we find the valuation due to infrastructure growth is not optimally channelized towards infrastructure development and results in inequalities in society. Secured Governance compliments the present PPP (Public Private Participation) developmental model, by ensuring balanced participation of the private and public sector taking advantage of value and valuation of IT HUB thereby yielding higher returns. This valuation of infrastructure, which grows many folds, needs to be shared by society and by the Government to support infrastructure development, ensuring balanced growth.
Secured Governance for Information Technology will provide for high-quality commercial development along with IT HUB, which serves as Techno-Economic HUB. These HUBs will be part of an existing or new development project. These HUBs will not only facilitate telecom users but also promotes commercial units generating employment and revenue from the defined region. The HUBs aid to boost employment generation and sustainable investment opportunities in a big way. It is expected to attract a billion crore rupees over the next five years and generating millions of direct and indirect employment opportunities in the region. With the robust outlook of the IT sector, it is expected that India will see private and foreign participation in the development and financing of IT HUB infrastructure, engineering services, equipment supply, and technology partnership in digital communication.
Dr. P. Sekhar,
Global Smart City Panel,
Director & CEO HDgtl,
A MedTech venture,