The Near Future of the IT Industry looks promising according to NASSCOM

NASSCOM, in its report - ‘New World: The Future is Virtual’ shares some interesting trends that the IT industry will witness in 2021. It captured the trends that shaped 2020-21 and what will the new normal look like. According to NASSCOM, Industry 4.0 showcases the theme of pandemic-led global reset. Amid this, the IT industry foresaw digital transformation and the changing value proposition for India.

An Outlook for 2021-22

The report also shows how the Financial year 2021-22 will look like for the IT sector in the country. It states that the latter half of the FY 2021 has witnessed a strong recovery of the IT sector in India. The industry also seems to be back to pre-COVID level growth, coupled with strong deal pipelines, and solid margins. Further, it expects that India’s technology industry will record positive growth of 2.3% in FY 2021. The sector will touch revenue of $194 billion.

As per NASSCOM’s CEO survey, 97% of CEOs anticipate a significantly better global economic growth in 2021 over 2020. In terms of hiring, 95% of CEOs expect 2021 hiring to be more than what they hired in 2020. Further, 67% of CEOs believe the Indian technology industry will grow significantly higher than in 2020.

The report records that exports will see modest growth of 1.9% at $150 billion. However, the domestic technology sector will perform better at YoY growth at 3.4% ($45 billion).

The New Normal

As per NASSCOM, the global impact of the COVID-19 pandemic has led to two major resets or shifts. First, it has accelerated the pace of digital transformation. Secondly, the novel, hybrid work model has redefined the dimensions of already evolving workplace and work culture. The pandemic suggests a significant increase in digital investments over the next 18 months in established companies and startups across the country.

In the new normal, the report also suggests that the industry is warming up to a blended work model. 70% of the survey respondents expect to have a higher prevalence of remote work along with a boost in gig workforce in 2021. While it suggested that Cloud, Cybersecurity and Collaboration were at the heart of the recovery, analysts are cautiously optimistic that technology will drive frontend operations and customer experience.

M&A is consolidating the core business

The industry saw an overall shift of 10% in outcome-based pricing. Further, offshore witnessed more than 4% shift in 2020. But, the attrition rate dropped by 50% in H2 2020 compared to H1 2020. But, the shining star of the industry was that it witnessed 146 M&A deals in 2020, 90% of which were digitally focused.

Further, as the industry looks forward to leaner structures with more flexibility and faster adoption of cloud-based products and services in 2021, 60% of the industry CEOs expect larger digitization deals in 2021. Investments will likely recover in core sectors including BFSI, Retail and Manufacturing. With hyper-digitization and technology adoption accelerating across sectors, 2021 will put the spotlight on the emergence of growth verticals like healthcare, pharma, medical devices, software and internet, consumer electronics.