Despite macroeconomic headwinds, Indian tech industry’s FY23 revenue likely to hit $245 bn: Nasscom

Despite macroeconomic and geopolitical headwinds, the Indian tech industry is estimated to hit $245 billion in revenues in FY23. According to Nasscom’s annual report, “Strategic Review 2023 - Priming for a ‘No Normal” Future,” the net revenue addition is estimated at $19 billion in FY23. Export revenue in tech grew by 11.4 per cent, and domestic revenue grew by 13 per cent in the 2023 fiscal.

While economic uncertainties such as rising inflation and the variability in the economic environment could serve as a dampener  for the tech sector, Nasscom added that it is cautiously optimistic for FY24. Nasscom Chairperson and President of Enterprise Growth Group at TCS, Krishnan Ramanujam, said that the sector’s growth in FY24 could be the same as in FY23.

As per Nasscom estimates, the Indian tech sector has directly employed 5.4 million people, with over 290,000 new jobs added in 2023. However, the report highlighted the employability gap in emerging tech roles as one of the headwinds for the coming fiscal year.

Attrition also declined in FY23, going down from 25.7 per cent in Q1FY23 to 21.8 per cent in Q3 FY23. On the issue of stagnation in fresher salaries in major tech companies, Debjani Ghosh, President at Nasscom, noted that a unified recommendation cannot be provided since hiring strategies are the key differentiator in demarcating competition in the tech space. However Ghosh added that, “we  (tech industry) are paying more than other industries as fresher salaries as a rule. Moreover improvement of pay scale is at a faster trajectory in this industry as compared to others.” Highlighting India’s tech talent, the report added that approximately 2 million of the workforce employed by the Indian tech industry is digitally skilled. India ranks number one in AI skill penetration, two in AI/ML/BDA talent pool and three in cloud professionals.

As per Nasscom, the Indian tech story for FY23 was one of resilience, where the industry achieved growth despite headwinds. Stronger growth was seen in the US and Asia Pacific, with sectors such as halthcare, manufacturing and BFSI performing well. The travel and the utility sector saw weaker growth; predictably, Europe was highlighted to have seen low growth.

As of the completion of FY23, India boasts a 27,000-strong startup ecosystem. However, Ghosh highlighted that India’s deep tech startup ecosystem still has room for growth. As per the report, India currently has 3,000+ deep tech startups, of which 485+ are inventive deep tech startups. 

R&D is also becoming a point of focus, with 73 per cent of all tech patents filed in 2022 being in emerging tech such as cloud, cyber security and AI. 

While cautious optimism is the mantra for the Indian tech industry in FY24, the report bugling that factors such as delayed decision-making as a result of economic uncertainty and inflation, employability gap in emerging tech roles, demand contraction and emerging tech regulations will be headwinds for the growth of the Indian tech industry in FY24. 

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