Digital transformation deals have seen a 30 per cent jump, cloud spending 80 per cent, and customer experience 15 per cent since the pandemic, said a report on Thursday.

Covid-19 has also accelerated digital adoption across industries as technology service providers are witnessing a sharp growth in digital deals, said a report titled ‘Future of Technology Services – Navigating the New Normal’ by the Nasscom.

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

It also said that top Indian technology service providers have performed better than analyst estimates in the second quarter of this financial year, and tech natives and digital reinventors with revenue over $3 billion have driven 65 per cent of the $6-trillion growth in market capitalisation between January to July.

Looking ahead to 2021, however, analysts are cautiously optimistic, especially in the area of enterprise software, which is expected to take the biggest leap on the back of remote working and other virtual services.

Certain micro-verticals like travel, hospitality and heavy engineering, which have been massively affected by the pandemic, will also take longer to recover. Technology service providers will need to actively rebalance their portfolio to play in the high growth micro verticals in the next normal, the report said.

Shifting focus

In the next normal, discussions with enterprise chief information officers (CIOs) suggest that 70 per cent of enterprises are looking to either increase or reprioritise their outsourcing spend, with business digitisation (including remote enablement) and cloud transformation being the top two spend priorities over the next 12-18 months, the report said.

Nearly 50 per cent of CIOs will be focussing on efficiency, resilience, and optimising spend wherever possible, it said.

The report further said that extensive acceleration in digital adoption by enterprises and a potential increase in outsourcing intensity due to remote working are contributing to the faster than expected recovery for the technology services industry.

With an increasing focus on remote enablement, companies are also reporting an increase in the digital dexterity of their employees and are actively reviewing processes to identify opportunities for automation and digitisation, it added.