Indian tech sector to grow 3.8% to $254 bn in FY24: Nasscom

The country's technology industry has crossed $250 billion revenue with an addition of $9.3 billion incremental revenue in the current fiscal and it is growing at 3.8%, taking the total industry revenue to over $253.9 Billion (Including Hardware), in FY2024, according to Nasscom, which released the key findings of the 'Strategic Review 2024: Rewiring Growth in the Changing Tech Landscape' on Friday.

The report said, with around 50% slide in tech spending and 6% decline in tech contracts in 2023 globally, the technology industry in India, similar to global markets, is currently navigating challenging times.

However, sub-sectors such as GCC (global capability centres) and ER&D (Engineering, Research and Development) emerged as growth hotspots. The ER&D sector alone contributed 48% to the total export revenue addition in FY2024, Nasscom said. GCCs continue to invest in India, and the industry saw an addition of 53 new GCCs in 2023.

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 sources, customer retention, and faster go-to-market strategies in newer markets for enterprises.”

CEOs expect technology spending to increase in 2024. Industries such as Hi-Tech, BFSI and TMT (technology, media and telecom) that underperformed in 2023 will likely improve in 2024, the report said.

With the advent of Generative AI, companies are expanding their portfolios and are redefining their service offerings to include AI-driven analytics, and CY2023 witnessed 2.7X growth over CY2022 in AI-related activity. Between 2023 and 2024 over 6.5 lakh employees are being trained in Gen AI skills, the report said.

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.”

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 proof of concept to production and increasing discretionary spending. CEOs also anticipate the hiring environment to normalise with the expected increase in both fresher and lateral hiring.