IT industry to post $194 billion revenue in FY21

Led by a strong recovery, the Indian IT industry is set to post $194 billion revenue in financial year 2021, a 2.3 per cent increase from $190 billion recorded during the previous fiscal.

While exports will contribute $150 billion to the overall revenue, up from $147 billion last year, the domestic IT sector would account for $45 billion ($43 billion in FY2020), according to a strategic review by IT industry body the National Association of Software and Services Companies (Nasscom).

The review - New World: The Future is Virtual - attributed the growth in domestic market, which grew 1.8 times more than exports, to hardware-led demand.

Indian IT industry was the among the first sectors to recover from the pandemic crisis and post-growth, despite headwinds such as a 3.2 per cent dip in technology spends across the world on a 3.5 per cent contraction in the world GDP, Nasscom President Debjani Ghosh said.

“We have emerged more resilient and more relevant from the crisis,” she added.

Industry growth

The resilient growth was led by IT services ($99 billion), business process management ($38 billion), engineering and R&D ($31 billion) and hardware ($16 billion) among others. While most of the verticals grew during the year under review, engineering and R&D posted a negative 0.2 per cent growth.

The industry continued to be a net hirer -- adding 138,000 new employees, taking the total workforce to 4.47 million. It was also the third largest tech start-up hub in the world with about 12,500 tech start-ups and 1,600 new additions in 2020, which was the highest in past three years. The industry had 12 new Unicorns, while the funding during the second half of 2020 was similar to the first six months of 2019, it said.

Nasscom Chairman U.B. Pravin Rao said: “Digital transformation is the top-most priority for global corporations and in a highly-connected world that will remain largely contactless for an extended period, there are shifts in business models, customer experience, operations, and employee experience. Our CEO survey for 2021 indicates that almost 70 per cent companies expect investment in global technology higher than the previous year.”.

“In this hyper-digital economy, trust with the four cornerstones of competence, reliability, integrity, and empathy, will be the single-most-important currency, leading the industry growth towards a better normal,” he added.

According to the numbers disclosed by listed companies, the overall deal pipeline for the industry stood at $15 billion.

Enterprises are re-balancing their technology spends to prioritise digitisation. The industry saw an overall shift of 10 per cent in outcome-based pricing; offshore witnessed more than four per cent shift in 2020, and attrition rate dropped by 50 per cent in second-half of 2020, compared to H1 2020.

The industry witnessed 146 M&A deals in 2020, 90 per cent of which were digitally focused. Companies saw a significant rise of 80 per cent in cloud adoption during H1 FY2021 v/s H2 FY2020. Further, Continental Europe and APAC emerged as one of the strongest growth geographies, while BFSI and healthcare were key growth verticals in FY2021.

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