New Delhi: Innovation and entrepreneurship will drive the next phase of growth for Indian technology and services market in the coming decade with the industry poised to touch $350 billion by 2025, a Nasscom-McKinsey report said ON mONday.
The report, titled Perspective 2025: Shaping the Digital Revolution’, said the industry is “well on track” to grow from $132 billion in FY 2014-15 to $225 billion by 2020 and further touch $350 billion by 2025.
“The industry is well on track for growth. There is a continued progression of double digit growth despite expansion of base. But below the calm waters, there is a lot of churn happening as well and companies will have to do a lot of things to address the challenges as well,” Nasscom President R Chandrashekhar told reporters here.
He added that these challenges range in nature, from geopolitical to regulatory to the need for innovation and disruption.
“The industry is expected to grow at over 11% to $225 billion in 2020 and 10%-plus to $350 billion by 2025. About 1.2-2 million people will be added with the next $100 billion revenue,” the report said.
Driven by the adoption of digital technology, the total addressable market for global technology and business services will likely expand to about $4 trillion by 2025, growing at an average annual rate of about 3.6%, the report added.
“Probably the most pressing need is for companies to develop offering along with new digital service lines, even as they re-invent their traditional service lines,” McKinsey & Company Managing Director India Noshir Kaka said.
He added that companies hoping to prosper in the “new environment” will have to closely watch six new service lines, including the Internet of Things, cyber security, social, mobility, analytics and cloud.
Out of the $350 billion, exports are expected to account for about $280 billion and $70 billion (from $34 billion in FY 2014-15) from the domestic market.
“The focus on Digital India, skills India and other such initiatives will drive consumption in India,” he said.
Talking about regulatory challenges, Nasscom Chairman BVR Mohan Reddy said issues with taxation and difficulties around starting and exiting businesses are some of the impediments faced by businesses, especially in the technology sector.
“We are engaging with the government to suggest how it can be made easy for entrepreneurs to start business. We are looking at rebranding Nasscom and the role that we play to reflect the changes in the environment,” he added.
He further said that Nasscom will continue to play an active role as the bridge between regulators, consumers, enterprises and government.