Economic Survey 2023: IT-BPM revenue grows 15.5% in FY22 on digital transformation

Technology

The Economic Survey 2023 has found a 15.5 percent growth in revenue for the Information Technology-Business Process Management (IT-BPM) sector in FY22, as against a 2.1 percent growth a year back.

Fast-paced digital transformation across client industries, technology convergence use cases, and adoption of enterprise-scale data and cloud strategy seen during the Pandemic years have fostered the growth in topline, the Survey said. Even the IT-BPM sub-sectors showed double-digit revenue growth.

Within the IT-BPM sector, IT services accounted for over 51 percent revenue share. Exports, including hardware, grew by 17.2 percent in FY22, up from 1.9 percent in FY21, owing to an increased reliance of businesses on technology, rollout of cost-reducing measures and the use of core operations.

Growth in exports came from all major markets, including the US, Europe and the UK. Focus on emerging markets like the Middle East and Latin America too have increased, leading to market diversification and, in turn, making the IT-BPM sector more resilient in the coming years.

The industry recorded nearly 10 percent estimated growth in direct employee pool in FY22, its highest-ever net addition to its employee base. “The domestic technology industry is estimated to grow at 10 percent on account of enterprise digital acceleration and transformation,” the survey said.

The industry also reported over 290 Mergers and Acquisitions in FY22, primarily focused on digital services.

“India’s massive digital infrastructure played a crucial role in driving technology adoption, with public digital platforms becoming the bedrock of India’s digital advantage,” the Survey said.

The NASSCOM, however, in its quarterly review in August 2022 indicated that “technology spending during FY23 is likely to see a relatively muted growth dampened by an expected global slowdown”.

Made in India digital first solutions

India has emerged as the global powerhouse for digital innovation in the recent years, especially for Engineering R&D (ER&D). In the last six years, many Global Competency Centres (GCCs) have been incorporated in the country, building either their largest or second largest ER&D hubs here.

"GCCs in India are increasingly performing complex R&D functions and are leveraging futuristic technologies and developing digitally innovative products as well building either the largest or the second-largest ER&D hubs in India," the Survey noted.

It added, "Patent filing has increased drastically, with over 138,000 patents filed between 2015- 21, with over 85,000 filed in emerging technologies."

Consequently, India's proportion of digital revenue as a percentage of total revenue has increased from around 26-28 percent in FY20 to 30-32 percent in FY22.

India also is uniquely positioned with several levers in terms of digital talent availability and leading the hybrid work model. India now has a significant subcontractor base, with increased hiring of new talent from tier-2 cities, including more women and skilling and re-skilling of non-tech talent adding to it.

India has been at the forefront of championing hybrid work model, the survey said. The HR functions at organisations are undergoing a transformation journey. Organisations are operating with an objective to deliver cost savings while expanding services and improving experiences by "using a combination of labour arbitrage, optimised workforce models, elimination of low-value vendor spends, increasing talent liquidity and reducing people space cost."