“The National Association of Software and Services Companies (NASSCOM) said on Thursday that significant growth in digital adoption by businesses and a possible growth in outsourcing intensity due to remote work are leading to a faster than anticipated recovery for the technology services industry.
In the second quarter of FY21, top Indian technology service providers performed better than analyst expectations, it said in the study titled ‘Future of Technology Services — Navigating the New Normal.’
McKinsey & Company has performed independent third-party research and analysis.
The study highlights that from January to July, tech natives and digital reinventors with sales of more than US$ 3 billion have powered 65% of the US$ 6 trillion market capitalization growth, highlighting that technology is now at the centre of future business recovery.
Although COVID-19 has accelerated digital adoption across industries, providers of technology services are seeing a sharp growth in digital deals.
After the pandemic, digital transformation deals have seen a 30% rise, 80% rise in cloud investment, and 15% in customer experience.
Companies are also documenting an improvement in their employees’ digital dexterity, with a growing emphasis on remote enablement, and are constantly updating processes to recognise automation and digitisation opportunities.
NASSCOM President Ms. Debjani Ghosh stated that the Indian technology services industry has had an unprecedented effect on the economy over the years through a multiplier effect on job development, balancing import bills through competitive exports, boosting start-ups and driving a significant contribution to GDP growth.
“The next 10 years will be radically different from the past and involve the creation of strategies and perspectives for all stakeholders to identify potential possibilities and reduce risks. Businesses need to build a recovery to ensure a quicker recovery.”
Mr. Noshir Kaka, Senior Partner and Global Leader for Analytics at McKinsey & Company stated that since the beginning of the pandemic, developments in digital re-invention and efficient operations have seen a remarkable expansion. The study indicates that in the last nine months, the world has outpaced toward digital adoption by three to five years.
He said, “We are seeing an intense emphasis on vertical digitalization, and our research shows that COVID-19 resilient digital offerings will drive 80% plus near-term spending.”
The study said businesses and chief investment officers are restructuring their spending on technology to embrace digitalization. In the second quarter of FY2021, major players in technology services recorded better performance than analysts’ estimates.
The technology service providers referred the increase in revenue to cloud and digital offerings, and the benefits accrued by companies from vendor consolidation.”