Indian IT industry revenue to reach $350b by 2025: NASSCOM

The Indian IT industry is likely to get $225 billion in revenue by 2020 and $350 billion by 2025, with the share of digital technology investment in cumulative expenditures expected to rise to 60 percent in ten years' time.

Notwithstanding the economic headwinds which have slowed down the global economy, the revenues of the Indian information technology (IT) and services industry are expected to be around $225 billion by 2020 and $350 billion five years later, the National Association of Software and Services Companies (NASSCOM) said.

According to the Indian IT Ministry, revenues from the IT and services industry were estimated to be $119.1 billion during 2014-15. Of this, IT exports accounted for $98 billion, while the domestic market generated $21.1 billion. The overall industry's growth over the last five years (in US billion dollars) is given below:

Industry growth\Year2010-112011-122012-132013-142014-15CAGR (2010-15)
Exports$59b$68.8b$76.5b$87.3b$98.1b14.57%
Domestic$17.3b$19b$19.2b$19b$21b7.99%
Total$76.3b$87.8b$95.7b$106.3b$119.1b3.23%

(Source: NASSCOM)

The sectoral forecast was based on the report Perspective 2025: Shaping the Digital Revolution, released by NASSCOM along with its knowledge partner, McKinsey & Company, which conducted extensive research for over a year. The report also predicted that as the industry grows over the next decade, its mix of technologies and demands will change significantly. The share of digital technology investment in cumulative expenditures is expected to rise from 10% in 2014 to 35% in 2020, and 60% in 2025.

"About 80% of incremental expenditures will be driven by digital technologies. These could be platforms, cloud-based applications, big data analytics, mobile systems, social media, and cybersecurity, as well as services needed to integrate these technologies with legacy tech," the report added.

India is the world's largest sourcing destination for the information technology (IT) industry, accounting for approximately 67% of the $124-$130 billion market. The industry employs about 10 million people, more than 50% of the jobs created in the technology sector in the last decade.

Commenting on the report, NASSCOM's senior vice president Sangeeta Gupta said that the Indian IT industry has gone through tremendous evolution in the past few years and over the last decade, it has grown six-fold in revenues, with its contribution to India's GDP having increased from 3 percent to 8 percent.

"As a matter of fact, IT sector is the biggest creator of net value added, contributing 60 percent to 70 percent of the net value added in the country by all sectors. With so many rapid changes on so many fronts, the industry is trying to understand and identify which emerging capabilities and trends provide new ways for organisations to compete or openings for new competitors," she told ZDNet.

Gupta further said that the report will help the industry understand the implications of these megatrends and the changing global technology and business services landscape, and will help in identifying innovative and disruptive technologies that will shape enterprises of the future.

The industry continues to thrive as it provides IT services three to four times cheaper than the US in the global sourcing market. Besides, several global IT majors like Microsoft, Oracle, Google, and others have opened their innovation centres in India in the last two decades, the report said.

The report, however, said that there has to be concerted action by the government, industry, academia, and NASSCOM to create the right conditions for the technology and services industry to sustain its momentum. The development agenda should bring government, industry, and academia together.

Releasing the report last month, NASSCOM chairman BVR Mohan Reddy and vice chairman CP Gurnani said it identified innovative and disruptive technologies that would shape the enterprise of the future.

"We aspire to build cutting-edge solutions and services from India that will shape the digital revolution globally," they said. "Companies hoping to prosper in the new environment will have to closely watch six new service lines -- Internet of Things, cybersecurity, social, mobility, analytics, and cloud," said Noshir Kaka, managing director of McKinsey & Company, India.