Digital thrust propels India’s rise to become the most preferred offshoring location, says report

India’s technology industry is growing and changing rapidly fueled by the continuing digital revolution in the country. This has resulted in India emerging as the most preferred location for offshoring with more than a half share in global sourcing, noted NASSCOM in a study.

However, the changing nature of industry under which many banking, automotive and manufacturing firms are re-branding themselves as tech companies, calls for an organisation wide transformation involving people, processes and technology, said Nasscom, the industry association for the IT-BPM sector in India in a study, ‘Strategic Review 2018: Amplify Digital’.

The study compares the performance of IT-BPM industry in FY18 to FY17 and notes a shift in India’s value proposition for the global technology industry towards offering end-to-end digital technologies, said the report.

India’s IT-BPM industry which includes IT services, BPM, Engineering R&D, Software products and E-Commerce which grew at 8 per cent in FY18 stands at $167 billion (excluding e-commerce). This shows an increase of $12 billion when compared with FY17 when its was at $154 billion. The industry has also created an additional employment of 105,000 in FY18 compared to FY17.

Moreover, even though the traditional services continue to occupy the major share of services revenue, the share of digital revenue has been growing rapidly. It has increased from 14 per cent in FY16 to 18 per cent currently and is expected to rise to 38 per cent by 2025, said the study.

The industry also has an increasing number of start-ups with 5,000-5,200 new companies, making India the world 3rd largest startup hub. These new digital companies are working on very niche technologies like – AI, blockchain, robotics, etc.

India might soon become a trillion dollar digital country with the government’s continuous efforts by government and collaborative approach to encourage private sector.

Nevertheless, the journey towards digitalisation has just began, the share of digital transaction in the country’s GDP increased by only 1 per cent to 6 per cent in FY18. It is expected to reach to 20 per cent by 2027.

Planning may also be needed to serve increasing rural demand which is going to grow to about a half of internet users by 2020, compared to 33 per cent in 2016.