Indian Tech Industry Sees Modest 3.8% Growth In FY24, Adds $9.3 Bn In Incremental Revenue
Against the backdrop of global uncertainty marked by a stark 50 per cent reduction in tech spending and a consequential 6 per cent decline in tech contracts during 2023, the Indian technology sector has displayed some fortitude.
Recent nasscom, a not-for-profit industry association for technology industry in India, data revealed a modest yet noteworthy growth of 3.8 per cent in the fiscal year 2024, with the industry accruing an additional USD 9.3 billion in incremental revenue, bringing the total revenue to USD 253.9 billion, which includes hardware sales.
Breaking down the revenue for 2023, the Indian tech industry showcased a diversified portfolio. Leading the charge was the IT Services sector, boasting a revenue of USD 128.4 billion, closely followed by Business Process Management (BPM) with USD 48.9 billion. Engineering Research & Development (ER&D) emerged as another significant contributor, amassing USD 43.3 billion, while Software Product sales reached USD 15.2 billion. Hardware sales rounded out the revenue breakdown with USD 18.2 billion.
Source: nasscomExport revenue played an important role in buoying the industry’s performance at USD 199.5 billion in 2023. Meanwhile, the domestic sector showed resilience and generated USD 54.4 billion in revenue. This domestic growth, inclusive of hardware, saw an uptick of 5.9 per cent from the previous fiscal year.
“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.” - Rajesh Nambiar, Chairperson, nasscom
Employment figures reflected the industry's continued dynamism, with a net hiring of 60,000 employees (total headcount to 5.43 million). The nasscom report noted that there has been a concerted effort to enhance digital skills among the workforce, with AI, Cloud, Data and Cybersecurity emerging as the top in-demand skills. Companies are dedicating significant resources, committing 60-100 hours per year per employee on upskilling initiatives.
Sub-sector analysis revealed growth hotspots within the industry. Global Capability Centres (GCC) and ER&D witnessed expansion due to increased digital capabilities and global sourcing. ER&D sector alone contributed 48 per cent to the total export revenue addition in FY2024. The domestic sector grew at a rate 1.8 times faster than exports, driven by heightened digital spending among Indian enterprises.
Sangeeta Gupta, Senior VP & Chief Strategy Officer at nasscom, addressed journalists during a press conference and discussed nasscom’s observations for the 2024. Gupta said, “Enterprise tech budgets most of our member companies expected to increase in 2024 over 2023. It's not going to be a hockey stick shift that we saw, but there is an expectation of improvement, especially, in some of the sectors that did not perform as well in 2023, like Hi-Tech, BFSI and TMT.” 
Source: nasscom“And given the fact that with all the shifts that are taking place from the technology environment, the investments that they have made during the covid period, as well as the AI transformation you will see growth in both some amount of discretionary spending as well as cost efficiency spending,” she added.
