The technology industry’s revenue is expected to hit $253.9 billion in fiscal year 2024, growing at a rate of 3.8 per cent, slower than the previous years’ rate of 8.4 per cent, as macroeconomic headwinds weigh down the momentum of the sector, according to a report by Nasscom.
The “Strategic Review 2024: Rewiring Growth in the Changing Tech Landscape” report noted that with around 50 per cent slide in tech spending and 6 per cent decline in tech contracts in 2023 globally, the technology industry in India, similar to global markets is currently navigating a tough terrain. Growing at 3.8 per cent the industry added $9.3 billion incremental revenue.
Sub-sectors such as Global Capability Centres (GCC) and Engineering, Research & Development (ER&D) emerged as growth hotspots as the addressable market expanded with digital capabilities and global ER&D sourcing. Mirroring the trend, the Indian tech services export revenue (excluding hardware) is expected to touch $199 billion in reported currency, a growth of 3.3 per cent compared to FY2023.
Debjani Ghosh, President nasscom said, “We do see FY2025 as the year of Capability Building as the new normal. Navigating the current challenges will require the industry to focus on 4Rs – Reshape -Accelerate transition to AI first companies; Reskill – Make talent the biggest competitive advantage; Rewire growth and Raise IP creation and R&D investments.”
Effect on hiring
The industry is expected to add 60,000 net employees in FY2024, significantly lower than 2.90 lakh added last year. Based on the cautionary demand environment, companies have been focusing on enhancing utilization and shifting to a more just-in-time hiring model. However, the focus on digital skills continued to remain strong with AI, Cloud, Data and Cybersecurity emerging as top in-demand skills for the industry in 2023, the report notes.
Although global macroeconomic headwinds continue to remain constant, CEOs expect technology spending to increase in 2024. Industries such as Hi-Tech, BFSI and TMT that underperformed in 2023 will likely improve in 2024.
According to nasscom Annual Enterprise & Tech Services CEO Survey, 2024, over two-third of respondents expect better revenue growth in FY 2025, driven by factors such as strong deal pipelines leading to project implementation, expansion in GCCs, AI accelerating from PoC to Production and increasing discretionary spending. CEOs also anticipate the hiring environment to normalize with the expected increase in both fresher and lateral hiring.
Rajesh Nambiar, Chairperson, nasscom, said, “While headwinds like global economic slowdown, Inflation, recessionary fears, and geopolitical conflicts continue to pose challenges, we are confident that the industry will bounce back. With digital tech spending expected to grow in 2024, we will also witness emergence of alternative demand source, customer retention, faster go-to-market strategies in newer markets for enterprises.”
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Published on February 16, 2024
