Economic Survey 2022-23: India IT Industry Estimated To Grow At 10% In FY23
India’s IT services sector grew 15.5% in FY22 and 2.1% in FY21, India’s Economic Survey 2022-23 said citing a Nasscom report.
Growth in India’s I.T. industry has eased from pandemic highs, the Economic Survey 2022-23 stated but remains buoyant despite facing macroeconomic headwinds stemming from the war.
India’s I.T. services sector grew 2.1% in 2020–21 and 15.5% in 2021–22, according to the survey report released on Tuesday, citing Nasscom data. That scorching pace of growth likely moderated to 10% in FY23 as a prolonged Russia-Ukraine war convulsed the global economy and China’s Covid Zero policy disrupted supply chains.
"The domestic technology industry is estimated to grow at 10% on account of enterprise digital acceleration and transformation," the Economic Survey 2022-23 stated.
Margin Defence
Still, India’s software exporters have braced themselves for impact.
Protecting margins has been a focus area amid supply challenges, as growing demand for tech talent limited the scope to pass on cost increases, the survey stated. Key margin levers include increased capacity utilisation, a higher share of offshore revenue, a declining share of travel and facility costs, and operating leverage.
Many firms are now focusing on new markets—the Middle East and Latin America—to reduce their dependence on the traditional hubs of the United States and Europe. This will increase the I.T.-BPM sector’s resilience in the coming years, the survey stated.
Digital Focus
As many as 290 M&A deals were struck in FY22 with a focus on digital.
“India’s massive digital infrastructure played a crucial role in driving tech adoption, with public digital platforms becoming the bedrock of India’s digital advantage,” the survey stated. “However, Nasscom's quarterly review in August 2022 indicates that technology spending during FY23 is likely to see a relatively muted growth dampened by an expected global slowdown.”
People Power
India's I.T. sector recorded nearly 10% estimated growth in direct employee pool in FY22 with a highest-ever net addition to its employee base, the survey said.
“India has emerged as a digital talent nation with a high share of the working population and growing undergraduate enrolments,” the survey said. “New talent-hiring from tier-II cities, with a focus on reskilling non-tech talent, has led India to evolve as a significant subcontractor base, with more women getting back into the workforce.”