India added more than 1,600 tech startups in 2020, making it the third-largest tech startup hub in the world, according to the National Association of Software and Services Companies (NASSCOM). The information technology sector is expected to close FY21 with a revenue of US $194 billion.
In its Strategic Review 2021 titled ‘New World: The Future is Virtual’, NASSCOM noted that during the pandemic year, when global output is estimated to have shrunk by 3.2%, the Indian technology sector grew 2.3% year-on-year on the back of rapid acceleration in digital transformation and tech adoption.
The addition of tech start-ups is the highest in three years and takes the total number to 12,500, including 12 new unicorns. India’s technology industry contributes around 8% relative share to the national gross domestic product (GDP), with 52% relative share in services exports, and 50% share in total foreign direct investment (FDI), based on FDI inflows for the period April to September 2020.
According to the release, despite the downturn, the Indian tech industry continues to be a net hirer with a significant focus on digital upskilling. The industry is expected to add more than 138,000 net new hires in FY2020-21, taking its total employee base to 4.47 million in the financial year. The digital talent pool is expected to cross 1.17 million, growing at 32% over the last year.
Investing in digital continues to rise as an imperative for the industry, with organisations building their capabilities and aligning business models to digital practices, NASSCOM noted. The Indian domestic market, driven by hardware-led demand, continued to show resilience, growing at 3.4% in the year. With an increased focus on innovation, India witnessed more than 115,000 tech patents filed by companies in India in the last five years.
The Chairman of NASSCOM, U.B. Pravin Rao, said, “Digital transformation is the topmost priority for global corporations and in a highly connected world that will remain largely contactless for an extended period, there are shifts in business models, customer experience, operations, and employee experience.”
NASSCOM explained that enterprises are re-balancing their technology spends to prioritise digitisation. The industry saw an overall shift of 10% in outcome-based pricing. Offshore witnessed more than a 4% shift in 2020 and the attrition rate dropped by 50% in H2 2020 compared to H1 2020. Companies saw a significant rise of 80% in cloud adoption during H1 FY2021 compared with H2 FY2020.
As per the findings, 97% of CEOs anticipate significantly better global economic growth in 2021 as compared to 2020. In terms of hiring, 95% of CEOs expect 2021 hiring to be more than what they hired in 2020. Also, 67% of CEOs believe the Indian technology industry to grow significantly higher than 2020.
Further, as the industry looks forward at leaner structures with more flexibility and faster adoption of cloud-based products and services in 2021, 60% of the industry CEOs expect larger digitisation deals in 2021. Investments are likely to recover in core sectors including BFSI, retail, and manufacturing. With hyper-digitisation and technology adoption accelerating across sectors, 2021 will spotlight the growth of verticals like healthcare, pharma, medical devices, software, and consumer electronics.
