INDIAN
IT INDUSTRY 2024 – YEAR END REVIEW
NEWS:
Key
indicators in IT industry point to a stronger outlook for 2025 and beyond
Global
Economic and Geopolitical Headwinds
- The Indian IT industry faced
significant hurdles in 2024 due to global economic uncertainties and
geopolitical challenges.
- Decreasing demand from key markets
such as the US and Europe, combined with price erosion, created a tough
business environment.
2.
Layoffs and Hiring Slowdown
- Widespread layoffs across the IT
sector and a sharp decline in hiring numbers created a wave of concern
among the public and industry stakeholders.
- The pressure to cut costs and
streamline operations led many firms to downsize their workforce.
3.
Dip in Global Tech Spending
- Nasscom’s annual review highlighted a
50% global decline in tech spending in 2023, which had a direct impact on
Indian IT firms.
- Contracts in the tech industry saw a
6% reduction, leading to fierce competition for new deals and projects.
Resilience
and Adaptability of the Industry
1.
Incremental Revenue Growth Despite Challenges
- Despite the headwinds, the Indian IT
industry managed to grow by 3.8% in FY2024, adding $9.3 billion in
incremental revenue.
- Total industry revenue, including
hardware, reached an estimated $253.9 billion, demonstrating its ability
to adapt and innovate.
2.
Quarterly Recovery Points to Improvement
- Revenue for the third quarter ending
December 2024 grew by 3.1% over the previous quarter, signaling gradual
recovery and stabilization.
- The industry’s performance in the
December quarter ended the year with a more positive outlook for 2025.
3.
Signs of Global Recovery in Tech Spending
- According to IDC projections, global
tech spending is expected to grow by 4.4% in 2024 and further increase by
5% in 2025.
- This anticipated recovery reflects an
improving global sentiment towards technology investments.
Opportunities
in AI and Generative AI (GenAI)
1.
AI and Algorithm Regulation to Create New Demand
- The US is expected to introduce
significant AI and algorithm regulation in 2025, focusing on the concept
of "guardrails-as-a-service."
- This presents a major opportunity for
Indian IT firms that are strategically investing in AI capabilities and
services.
2.
Workforce Transformation and Talent Demand
- AI adoption is set to disrupt
traditional workplace hierarchies, requiring a shift in workforce
strategies.
- The demand for skilled professionals
in areas like AI and data science is expected to increase exponentially,
necessitating proactive talent development.
3.
Evolving Role of IT Service Providers
- IT service providers are
transitioning from traditional service delivery models to becoming
value-added ecosystem orchestrators.
- This shift involves integrating
domain expertise with technology, capital, and partnerships to deliver
greater value to enterprises.
Key
Growth Drivers for the Industry
1.
Expansion of Domestic Markets and GCCs
- The domestic IT market is expanding,
along with significant growth in Global Capability Centers (GCCs),
providing a robust foundation for future growth.
2.
Focus on Engineering R&D
- Indian IT firms are increasingly
focusing on engineering research and development, leading to the creation
of innovative solutions and intellectual property.
3.
Thriving Deep-Tech Start-Up Ecosystem
- A diverse and dynamic start-up
ecosystem in deep-tech is contributing to innovation and attracting
investments in emerging technologies.
4.
Accelerated Adoption of AI and GenAI
- The continued innovation and adoption
of AI and Generative AI technologies are driving advancements across
industries, solidifying India’s position as a global tech hub.
Shortcomings
and Challenges Ahead
1.
Talent Retention and Development
- Attracting and retaining talent in
specialized areas like AI, machine learning, and data science remains a
significant challenge.
- Companies must redesign traditional
compensation models and career advancement structures to appeal to top
talent.
2.
Sustainability Challenges
- The rapid growth in computing power
demand has highlighted the need for energy-efficient technologies and
sustainable practices.
- Companies must focus on reducing
their environmental impact while meeting the rising demand for digital
services.
Future
Outlook (2025 and Beyond)
1.
Year of Transformation and Growth
- 2025 is anticipated to be a
transformative year, as companies embrace new realities of the digital
economy.
- Growth will be driven by advancements
in AI, cloud computing, and other cutting-edge technologies.
2.
Impact of Geopolitical Tensions and Tech Sovereignty
- Disruptions in global supply chains
caused by geopolitical tensions will create challenges but also open up
new opportunities for Indian IT firms to localize and innovate.
3.
Strategic Collaborations for Growth
- Indian IT firms will need to build
partnerships with academic institutions, industry experts, and technology
providers to stay competitive.
- Leveraging these collaborations will
help them navigate challenges and unlock new avenues for growth.
Conclusion
While
2024 was marked by challenges such as reduced global tech spending, workforce
restructuring, and economic uncertainty, the Indian IT industry has shown
remarkable resilience. By capitalizing on opportunities in AI, domestic market
expansion, and strategic collaborations, the industry is poised for a strong
comeback in 2025 and beyond.
Source: https://www.thehindubusinessline.com/news/it-industry-sees-slow-recovery-amid-global-uncertainties-nasscom/article69029293.ece