India Tech Industry Revenue to Reach USD 254 Billion in FY24: Nasscom

Mumbai, Feb 16 (PTI) The domestic technology industry's revenue is projected to grow 3.8 per cent to USD 254 billion this fiscal, industry body Nasscom said on Friday and highlighted the creation of 60,000 more jobs during this period.

The industry had clocked a revenue of USD 244.6 billion in the same period last year, according to Nasscom's annual strategic review report.

Excluding hardware, the revenue is expected to touch USD 199 billion, a growth of 3.3 per cent over FY23, as per the report.

Domestic revenue is estimated to log 5.9 per cent growth at USD 54.4 billion from USD 51.4 billion in FY23.

The projected 3.8 per cent growth is despite a 50 per cent slide in tech spending and 6 per cent decline in tech contracts in 2023 globally.

This means the industry has added USD 9.3 billion incremental revenue in the fiscal, Nasscom said.

"It was a growth year despite all headwinds, the surprise here was that while exports slowed down a bit, we definitely saw a significant increase in domestic market, including the business for tech services.

"I think it was the fastest growth we have seen in domestic market," Nasscom President Debjani Ghosh said at a virtual press briefing.

The growth in the domestic revenue was primarily driven by government and enterprise spending.

She said some of the tailwinds that stood out last year for the industry include India continuing to be the preferred hub for GCC (Global Capability Centre) and this is getting even stronger.

"As we see companies, as we see the GCC scope of work moving... and work to more of R&D and more of innovation, this is where the India attraction goes up significantly, primarily driven by talent and political stability and ease of doing business," Ghosh added.

The Engineering Research & Development (ER&D) sector alone contributed 48 per cent to the total export revenue addition in FY24, Nasscom said.

The ER&D sector, she said, was expected to do well.

"Going forward, this is going to be one sector that we should watch out for," she said.

According to Nasscom, while there was a marginal growth in the deal pipeline, the big change was the change in the deal size with a 70 per cent increase in the signing of larger deals (USD 100mn+).

She said while there was a lot of talk about job losses in the face of AI, the industry grew in terms of employment.

Despite reports of massive retrenchments, the industry is likely to add net 60,000 jobs, taking the estimated total headcount to 5.43 million during the fiscal.

"(But) what we are seeing definitely, there is a correction because there was also a lot of over-hiring during the Covid years," Ghosh said.

Nasscom said it is seeing the hiring moving towards jobs in AI, data, clouds, cyber security.

"So the frontier technologies is where we are seeing the demand growing and the industry is putting a lot of efforts to ensure that we continue to upskill the existing workforce," she added.

Globally, she said, nearly 6,50,000 employees are being trained on generative AI skills.

"We do see FY25 as the year of capability building as the new normal. Navigating the current challenges will require the industry to focus on 4Rs -- reshape: accelerate transition to AI first companies; reskill: make talent the biggest competitive advantage; rewire growth; and raise IP creation and R&D investments," she said.

While headwinds like global economic slowdown, Inflation, recessionary fears, and geopolitical conflicts continue to pose challenges, Nasscom is confident that the industry will bounce back, Nasscom Chairperson Rajesh Nambiar said.

"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," Nambiar added.

According to the Nasscom Annual Enterprise and Tech Services CEO Survey, 2024, global economy in 2024 is expected to grow at a similar pace as 2023 while India will continue to grow 2x faster.

Although global macroeconomic headwinds continue to remain constant, CEOs expect technology spending to increase in 2024, according to the survey.

Industries such as hi-tech, BFSI, and TMT that underperformed in 2023 will likely improve in 2024, as per the survey.

According to the survey, over two-thirds of respondents expect better revenue growth in FY25, driven by factors such as strong deal pipelines leading to project implementation and expansion in GCCs.

CEOs also anticipate the hiring environment to normalise with the expected increase in both fresher and lateral hiring, the survey added.