Bl Interview. India needs to promote domestic patient capital to back start-ups: Nasscom President

India has made remarkable strides in cultivating a skilled workforce proficient in AI, with an installed capacity of over four lakh professionals. While India ranks first in AI skills penetration and AI talent concentration as per the OECD, we need to move the narrative from AI talent to Generation AI. We must work together to unlock the full potential of India’s demographic dividend by creating a generation AI - AI-literate citizens who know how to use the technology responsibly.

Nasscom proposed a three-pronged strategy to achieve this: to become the world leader in data and AI skills by training 1 million world-class AI professionals to meet global demand, empowering an 18–20 million white-collar workforce to utilise AI tools for enhanced productivity, and creating an entire generation of AI users with the skills and capabilities to unlock its potential across all aspects of life.

At around 27 per cent, India has the lowest tech talent demand supply gap among global tech leaders such as the USA, UK, Canada, and Australia. Talent is India’s biggest differentiator, and the focus must be on ensuring that talent is relevant with adequate skilling and aligned with the accelerating pace of tech. The Indian tech industry is continuously working on bridging the gap by shifting focus to ’skill-based organisations’. Talent retention has a lot to do with organisational values and culture.  This is a great time for organisations to reimagine their WHY and culture for the digital era.

Job displacements go hand in hand with every major tech shift, from the invention of steam engines to AI.  This is not new.  The pace, however, is much faster now, and we need to significantly amp up our ability to skill people for the new jobs that are being created, be they AI trainers, data annotation specialists, or prompt engineers. Students will have to continuously expand their learnability index and invest more in rapid-scale skilling, upskilling, and re-skilling to remain relevant for future jobs.

While the overall demand environment continues to remain volatile owing to global macroeconomic factors and on-going geopolitical tensions, the industry is witnessing several green shoots of growth.

While discretionary spending is decelerating, the focus is shifting towards maximising returns on technology investments made during the last two years. India continues to be a preferred partner for projects focussed on cost optimisation and efficiency. Segments like business process management, Engineering R&D continue to witness healthy growth as the addressable market is expanding with digital capabilities. According to nasscom’s recent report, India’s share in the global business ER&D sourcing is projected to increase from $44-45 billion in 2023E to $130-170 billion by FY30.

Global Capability Centres continue to invest in India, expanding their service portfolio, and new GCCs are setting up operations. Generative AI continues to create new conversations with customers and companies are increasingly investing in leveraging these platforms to showcase the art of the possible. All of these factors point that technology’s role as a strategic imperative is set to remain paramount, serving as a critical catalyst for business innovation and transformation.

While Nasscom doesn’t publish growth forecasts, global businesses continue to exercise caution in tech spending owing to the economic volatility. As of Q2FY2023 the deal pipeline for the Indian tech sector remained robust, similar to Q1FY2023. However, businesses maintained a cautious outlook, with a focus on enhancing strategic partnerships with customers.

The funding winter is a global phenomenon and not a major surprise. However, despite the overall slowdown, investor confidence in technology start-ups, especially DeepTech, has been on the rise. As India starts to grow in terms of its ambitions and areas of focus, DeepTech holds the potential to generate substantial economic value across various verticals such as health tech, climate tech, agri-tech, and energy and mobility sectors. However, the development of successful DeepTech solutions demands substantial patient capital and time resources. India needs to build its domestic patient capital (domestic patient capital refers to long-term investments made by domestic investors in venture capital funds and companies), and the government should focus on creating policies as part of the upcoming National Deep Tech policy that can fuel the ecosystem to grow.