Over the last thirty years, the Indian tech industry has grown significantly. It is responsible for about 8% of India’s total Gross Domestic Product (GDP) in 2013. Between 2014 to 2015, the GDP grew significantly to 9.5%. Since then, the tech industry has been one of the top five largest industries in the country.
In 2017, the Indian IT Industry employed about 4 million people which was an increase from 170k in 2016. Much of these employment opportunities came from large firms. For instance, Tata Consultancy Services has a workforce of over 275k people and Infosys with over 156k people.
Despite the growth of the industry, the sector has been battling several challenges. This has resulted in many ups and downs in the industry. For example, in 2018, the National Association of Software and Services Companies (NASSCOM) reported that the IT industry in India only increased by 5% and that the rate of employment decreased by about 40% from 2014 to 2017.
It’s the same situation even in 2022. In 2021, the Indian IT sector was reported to have grown at a rate of 21.2%. However, in 2022, it is only expected to grow at a slower pace – just a 7.7% rate due to several reasons.
In this article, we will analyze the obstacles facing the industry.
Economic Slowdown
Most of the clients of the Indian tech industry are from countries like the UK, the US, Canada, and Spain. In recent years, there has been an economic slowdown globally, which has also affected these countries. As a result, IT industry leaders are experiencing the heating of geopolitical tensions, rising inflation, and fears of a possible recession.
Jayanth Kolla, the co-founder of Convergence Catalyst, a market research firm, believes that multi-billion-multi-year tech projects of large IT companies will witness a slowdown. Kashyap Kompella, chief executive and founder of RPA2AI Research also urged the industry to expect a 10% to 15% reduction in overall IT spending. Responding to the situation, the Indian tech sector has initiated cost-cutting measures.
Global Competition
The global IT market was valued at around $8,384.32 billion in 2021 and is expected to grow up to $9,325.69 billion in 2022. While the Indian market continues to grow, it’s not one of the biggest in the world yet. Many IT companies around the world are speeding up their growth by improving their services and releasing more innovative products and services. Hence, there is a war out there between companies to ensure they maintain their competitive edge in the global market.
The competition can especially be seen when amongst gaming studios that develops localized games. For instance, you can find many Andar Bahar games online. Even though this is an Indian game and most of the players are Indians, there are still many foreign gaming studios that develop these games.
Talent Shortage
According to reports, India has more than 1.67 million app developers and is expected to have the largest developer population by 2024. Despite this, recent surveys by DigitalOcean Holdings and NASSCOM showed that talent shortage in the Indian tech industry could become worse soon. Many developers in the country are moving to Southeast Asia and other parts of the world in search of better opportunities.
Negative Reputation
In 2016, Tata Consultancy Services was fined $420 million by a US Court after being accused of illegally extracting confidential information, trade secrets, and data belonging to Epic.
Also, Infosys paid a fine of $1 million after violating the visa and immigration policies in the US. The Indian IT giant was accused of employing non-US citizens in New York without paying wages and taxes.
As mentioned, Infosys and Tata Consultancy Services are some of the biggest IT firms in India. Their involvement in such situations gives the Indian tech industry a negative reputation in the global market.
Bridging the Gap between Rural and Urban Population
With about 67% of Indians living in rural areas, it has become necessary for tech companies to bridge the gap between the rural and urban populations. There are currently about 200 million internet users in Indian rural areas, as per Kantar IMRB ICUBE. However, the difference in consumption habits within the rural and urban demographics. Thus, Indian tech companies have to personalize their services to each demographics to meet the different needs and demands in the market.
(Above mentioned article is consumer connect initiative. This article is a paid publication and does not have journalistic/editorial involvement of IDPL, and IDPL claims no responsibility whatsoever)
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