From an era of relative predictability to a more uncertain, more volatile environment, emerging tech shifts, geopolitics, and war, clearly, we are in an era of a no normal world.
Does a no normal mean a prolonged global downturn? I would say not.
It means an environment of more rapid shifts and differentiated growth based on the ability of companies to invest in the right opportunities.
Technology spending has also witnessed massive shifts in this period.
Also read | Tech industry revenue set to reach $245 billion in FY2023E: Nasscom
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From a complete cut-back in 2020 to massive acceleration in 2021 to a more moderate period in the second half of 2022, to a shift in value realisation from technology investments in 2023, the life cycle of technology spending continues to swing.However, the vision that every company will be a technology company is here to stay.
Covid-19 accelerated the digital transformation journey of enterprises and governments.
While the current environment may see some shift in priorities, investment in digital transformation continues to grow.
In 2021, McKinsey said in a report for Nasscom that enterprise tech spending as a percentage of revenue will move from 3% in 2020 to 5% by 2030.
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This is in fact accelerating and early data suggests that in 2022 itself, the number would have moved to 4%.
India’s technology sector continues to be a key driver of growth for the economy.
The sector is estimated to touch a gross revenue of $245 billion in FY23, adding incremental revenue of $19 billion and 290,000 new jobs.
What has been interesting in the year is the growth in core sectors.
The United States, which is India’s largest market, grew faster as did some of the mature verticals like financial services, manufacturing and hi-tech.
India continues to attract more global companies to set up centres and 65 new centres came up during the year. The country now hosts 40% of the global centres.
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As we look at FY24, we are entering the year with some moderation or volatility in demand driven largely by the uncertainty of external factors.
Enterprises in the near term are prioritising projects that focus on cost efficiencies, enhanced productivity, and digitisation projects. They are partnering with service providers or their own centres to achieve these outcomes, while keeping an eye on new opportunities, technologies and differentiating their customer experience.
ETtechSo as a technology service provider, what should be the playbook for navigating growth in this no normal? It will vary from company to company, but here are a few imperatives that will be common for all.
– Scenario planning that tracks the demand shifts, geopolitical dynamics, regulatory changes; investment in resilient hotspots and actions to stay ahead. Multiple scenario strategies are key to navigate sudden uptick in demand. At the same time, resilience will need to be a constant.
– Enhanced Customer Centricity – increasingly global enterprises are looking at domain expertise from their providers and expect them to be their digital reimagination and transformation partners. Technology companies have been investing in building their digital capabilities over the years and can look at differentiated partnerships or business models that will bring digital transformation to the core of the enterprise.
– Digital mastery and innovation will be key differentiators in the near, medium, and the long term. Investment in capabilities in emerging technologies, building IP, platform-based solutions, ecosystem partnerships, M&A, reimagining and not just re-engineering processes will help build and accelerate leadership.
– The war for skills – especially the specialized ones – will continue, unemployment even in the current environment is at a record low. Data from CompTIA shows that US tech unemployment dipped to 1.5% in January 2023. In India, the top two priorities for talent are increasingly focussed on skilling and employee engagement. Companies will need to invest more in learning and development of their talent as well as evolve the right hybrid model that enables collaboration, culture, and agility.
– Trust, inclusion and sustainability are the currency for this no normal. Customers, employees and other key stakeholders will prefer partners who walk the talk on these key imperatives with policies and actions. Building a purposeful organisation requires leadership commitment and investment of resources.
India’s technology sector has demonstrated enormous agility, resourcefulness and resilience over many phases of uncertainty and is well poised to navigate growth in this “no normal” too.
(The author is chairperson, Nasscom. Views are personal)
