India's tech services revenues to touch $300-350 billion by 2025, says Nasscom

The technology sector currently accounts for 8% of the overall economy

India's technology services industry is expected to grow by 2-4 per cent over the next five years to touch annual revenues of $300-350 billion, according to the National Association of Software and Services Companies (Nasscom).

In a report titled 'Future of Technology Services -- Winning in this decade', released on Wednesday, the IT services industry body said this growth could be achieved if India can win in the cloud, AI, cybersecurity, and other emerging technologies. This will require closer collaboration among stakeholders across the private sector, academia and the government, it said.

Fuelling over 50 digital initiatives across sectors like banking and finance, healthcare, and governance, among others, the technology services industry continues to be a prime driver of India's digital dream with a contribution of 8 per cent to the overall economy.

With the ongoing pandemic and the pace at which almost every sector has accelerated their digital transformation journeys, the increasing cloud consumption and other digital services like Artificial Learning (AI) and Machine Learning (ML) are making way for the digital and cloud services, with an opportunity to reach $600-700 billion by 2025.

Coupled with cybersecurity and IoT digital spending, the technology services are expected to reach $300-350 billion in revenue by 2025, Nasscom said.

"The government needs to encourage and support digital literacy and skilling to ensure its talent, energy, imagination, knowledge, and unmatched commitment unites to address the customers' surging needs.

It is equally vital for India to reach a new level of cooperation to continue the remarkable growth observed in the sector," Debjani Ghosh, President, Nasscom said.

The next decade will continue to witness growth in technology spend – primarily driven by the rise of technology natives and digital reinventors, new tech-enabled business models like ecosystems, direct-to stakeholder channels and a rise in demand for Digital 2.0 accelerated by the industrialisation of Cloud, AI and cybersecurity, Nasscom said.

Independent third-party research and analysis was conducted by McKinsey & Company as Knowledge Partners.

Being valued at roughly $1 trillion today, the technology services sector is now among the most significant contributors to economic growth worldwide, especially in India—the industry now produces about 27 per cent of the nation's exports and provides livelihoods to about 4.4 million people. Despite this, players across the sector face challenges like driving growth in revenue per employee and providing them with digital skills, the Nasscom report said.

However, with the government playing a more significant role in digital services, increased investment and innovation, and the rise of regional power centres dominated by local players, businesses and the industry will see a massive transformation in the next decade, it said.