India’s technology services industry can achieve $300-350 billion in annual revenue by 2025 if it can exploit the fast-emerging business potential in cloud, artificial intelligence (AI), cybersecurity and other emerging technologies, according to a report by industry body Nasscom and global consulting firm McKinsey issued on Wednesday.
The report forecast the domestic tech services industry to grow at 2-4% a year during the period as industries worldwide continue to see rapid adoption of digitalization to make a faster recovery from the covid-induced disruptions.
According to the report titled ‘Future of Technology Services – Winning in this decade’, reaching the milestone will need closer collaboration among all stakeholders—private sector, academia and the government.
Valued at roughly $1 trillion, tech services is among the biggest contributors to economic growth globally, especially in India where the industry currently generates about 27% of the nation’s exports and employs about 4.4 million people.
“The Indian Technology services sector can utilize the potential of deep technologies like cloud, artificial intelligence, machine learning, Internet of Things, etc. through effective transformational practices, thereby contributing to the overall economy in the coming decade,” said Debjani Ghosh, president, Nasscom.
Despite the strong potential, companies in the sector face challenges such as driving revenue growth per employee and preparing them with digital skills. The report, however, forecasts that businesses and industry will see a massive transformation over the next decade with the government playing a more crucial role in digital services, increased investment and innovation, and the rise of regional power centres dominated by local players.
“The government needs to encourage and support digital literacy and skilling to ensure its talent, energy, imagination, knowledge, and unmatched commitment unite to address the customers’ surging needs. It is equally vital for India to reach a new level of cooperation to continue the remarkable growth observed in the sector,” said Ghosh.
As per the report, the coming decade will witness growth in technology spending along with increased competition. This will intensify the need for scale and specialization among Indian companies to compete with their global rivals in offering technology services.