If there is one key focus from the 2022 budget, it is that technology has become a key enabler across sectors from agriculture to health. With technology becoming a critical part, this would also provide huge opportunities for growth for the Indian IT sector, according to experts.
In her budget speech on February 1, Finance Minister Nirmala Sitharaman, announced a range of initiatives including digital currency, e-passport, and 5G, where IT services firms can play a role.
Mrinal Rai, Principal Analyst, ISG, said, “This is expected to give good opportunities for Indian IT firms for bagging government contracts. The focus on 5G spectrum roll-out opens the door for a lot of digital transformation oriented initiatives among the Indian enterprise clients and providers are well-equipped to support them.”
“With a focus on emerging technologies, IT service providers have a great chance to showcase their skills and contribute in the growth. There are some service providers already well established and well experienced with Indian government projects, while some had recent not so good experience. These initiatives could also open doors for the tier-2 and mid-tier IT firms to showcase their differentiation,” he added.
Pareekh Jain, founder, Pareekh Consulting, said that IT firms that have a strong focus on the India market like TCS and Infosys benefit a lot from the announcements.
What are the opportunities?
Blockchain-enabled digital currency will be issued by the Reserve Bank of India starting 2022-23. This is expected to result in an efficient and cheaper currency management system. Most of the Indian IT firms have been investing in building blockchain solutions. For instance, all top IT firms such as TCS, Infosys, Wipro, HCL Tech and Tech Mahindra have invested in blockchain solutions.
If one takes into consideration 5G, the government will be conducting auctions in 2022 to facilitate rollout of 5G mobile services within 2022- 23 by private telecom providers. Indian IT companies are also investing in 5G roll out and are partnering with telecom providers for the same. On June 21, 2021 Airtel and Tata Group’s IT arm TCS announced partnership for implementation of 5G solutions, starting pilot from January 2022.
CP Gurnani, CEO & MD, Tech Mahindra said during the earnings call that the company would have the advantage of being in the forefront, whether it is 5G for the equipment, which includes all the medical devices, or 5G for the enterprise.
“As a matter of fact, as I mentioned to you, the communication business has grown almost 7 percent. And the majority of that is that we are now being recognized globally as a player in software defined networks,” he said.
“The issuance of e-Passports using embedded chip and futuristic technology will be rolled out in 2022-23 to enhance convenience for the citizens in their overseas travel,” the FM said during her budget speech.
TCS recently renewed its contract to work on the second phase of the Passport Seva Programme. While TCS did not disclose the value of the renewed deal, the contract could be worth Rs 8,000 crore according to an industry analyst. The work would entail developing new and innovative new solutions to enable the issuance of e-passports and further enhance the citizen experience using technologies such as biometrics, artificial intelligence, advanced data analytics, chatbots, auto-response, natural language processing, and the cloud.
Government has worked with companies like Infosys, TCS and Wipro on several government projects such as the new e-filing portal, GST, and ministry of corporate affairs portal. Proposed IT-driven SEZ units too could see involvement of the IT firms.
Engineering R&D firms too have a lot to benefit, Jain said. “Defence R&D will be opened up for industry, startups and academia with 25 per cent of defence R&D budget earmarked. Private industry will be encouraged to take up design and development of military platforms and equipment in collaboration with DRDO and other organizations through SPV model. An independent nodal umbrella body will be set up for meeting wide ranging testing and certification requirements,” Sitharaman said. This would open up opportunities for companies like L&T Technology Services and Cyient that are working in the space.