The Indian technology sector, which has been a major contributor to the country’s economic growth, is facing a challenging period. According to Nasscom’s Strategic Review 2023, India’s tech sector revenue is projected to reach $245 billion in fiscal 2023, with a slow growth rate of 8.4% YoY.
The Indian technology industry generated approximately $226 billion in revenue during fiscal 2022, which ended on March 31, 2022. If we do the math, the industry will generate $19 billion more revenue in FY23 compared to the previous fiscal year.
Interestingly, technology segments such as IT services, BPM, Software products, and Engineering Research & Development (ER&D) will be driving the growth this year.
The report also emphasises how the Indian government and enterprises have boosted their investment in emerging technologies in recent years. As a result, there has been an increase in domestic technology adoption. In the last one year, the country recorded an impressive 13% growth in domestic revenue in rupee terms, with Indian enterprises showing a significant increase in digital spending.
Key Observations
- The ongoing Russian aggression against Ukraine has resulted in geopolitical challenges and inflationary pressures, leading to rate hikes worldwide. As a result, the technology sector appears to be preparing for a turbulent period.
- India’s tech industry remains the leading net employer, providing jobs for over 5.4 million workers, including 290,000 new jobs in FY2023. However, the country added approximately 450,000 new IT talent in FY222.
- It is important to note that 36% of the workforce in India’s tech sector possesses digital skills. The industry also ranks among the global leaders in AI skills penetration, boasting the second-largest pool of AI/ML and big data analytics talent. Additionally, the sector has the third-largest installed supply of cloud professionals, demonstrating the workforce’s readiness to work with cloud-based technologies.
- In November 2022, a market research firm, Gartner, released a report that projected a 2.6% growth in IT spending by Indian businesses in 2023. The report suggested that despite the concerns surrounding global inflation and a weakening rupee, Indian businesses will maintain their investment in critical segments of information technology over the next year.
- An employability gap originating from the education system is causing headwinds for the industry, as fresh graduates lack the required skills, leading to the need for significant investment in training to meet client requirements.
- Generative AI platforms like ChatGPT will have minimal impact on jobs as they primarily automate routine tasks. In fact, AI is most likely to create job opportunities for Indian jobseekers.
- Debjani Ghosh, the President of Nasscom, urged jurisdictions to regulate the end use of technologies rather than technologies themselves in order to foster innovation.
- Ghosh also said that the technology industry in India is making progress towards achieving its growth target of $500 billion by 2030.
- India currently employs 2 million women in the IT industry. There will be a net addition of over 140k women employees by the end of the fiscal year, demonstrating a strong commitment to bringing gender diversity to the workplace.
Takeaway
The tech sector in India has witnessed more than 30,000 job losses over the last two years. As per the data compiled by Moneycontrol, startups in India terminated the employment of nearly 20,000 workers in FY22.
Moreover, leading firms such as TCS, Infosys, Wipro, and HCLTech have released hiring data that points to worrisome trends for job seekers in India. Collectively, these tech giants hired only 1,940 employees in the third quarter of FY23, marking a concerning 93% drop from the previous quarter.
The trend of massive layoffs and a slowdown in the growth rate in the tech sector is not limited to India alone; it is a global phenomenon. The past year has been particularly challenging for the tech industry worldwide, with economic conditions causing significant layoffs in the industry.
Many of the biggest players in the tech space, including Twitter, Meta, and Apple, have cut hundreds or even thousands of jobs globally. Recent data shows that these layoffs are widespread, with over 900 tech companies worldwide letting go of a total of 150,000 employees in 2022.
