Indian technology sector growth is set to slow down to 8.4 per cent to USD 245 billion in FY23, Nasscom said on Wednesday. The industry had grown at 15.5 per cent -- its best in a decade -- to USD 226 billion in FY22 as the changes brought about by the Covid pandemic made technology spends a necessity for clients.
However, as the Russian aggression against Ukraine rages on posing geopolitical challenges and stoking inflation which have led to rate hikes the world over, the tech sector seems to be bracing for choppy times. A survey of chief executives by Nasscom has revealed that chief executives are "cautiously optimistic" about the future, and the industry lobby also declined to share its target for FY24.
The body's president Debjani Ghosh said the geopolitical worries are leading to delays in decision making at companies to award IT contracts and there is also a demand contraction in some markets. She also said that there are a slew of tailwinds working for the industry, like a strong demand with the top-5 companies reporting a deal pipeline of USD 18 billion, a 10 per cent growth in overall client base reported by select tech companies and companies' ability to increase utilisation by 6-7 per cent, which will help profits.
On the headwinds front, Ghosh flagged an "employability gap" that has its roots in the education system, where the industry is not getting fresh graduates with the right skill sets and has to invest a lot of resources to make them ready to serve client needs. The overall headcount is set to increase by 2.90 lakh during the fiscal year which will be ending on March 31 to take the sector's overall base to 54 lakh people.
The increase in employees is lower than the 4.5 lakh jobs added in FY22, but Krishnan Ramanujam of largest IT player TCS, who is the current chairman of the body, said the last two years were an exception and the addition is higher than the pre-Covid period. Ghosh said that generative artificial intelligence platforms like ChatGPT's impact on jobs will be limited to doing away with routine work done by employees, but stressed that AI will be a creator of jobs.
She also said that while the larger debate is centred around the impact on jobs, sufficient attention also needs to be paid to using AI responsibly and added that Nasscom runs a centre on ethical AI. Ghosh also exhorted jurisdictions to regulate the end use of technologies rather than technologies itself in order to promote innovation.
The Indian IT exports are set to grow by 9.4 per cent to USD 194 billion on a reported currency basis, and would have grown by 11.4 per cent if not for the currency impact, Nasscom said. India presently takes care of 57-58 per cent of the global sourcing requirements and the tech sector is all set to be USD 500 billion in size by 2030, Nasscom said.
The domestic revenues are set to jump by a surprising 13 per cent to Rs 4.12 lakh crore on continued investments by government and local governments enterprises, Ghosh said. On the talent side, Nasscom said 36 per cent of the 54 lakh employees are trained in digital skills.
Attrition -- which had turned into a big trouble for the sector in the recent past because of the high demand for talent on the back of handsome revenue growth -- has softened to 21.8 per cent as of December quarter as against 25.7 per cent at the end of June quarter, Nasscom said. The 2.90 lakh new hires in FY23 will include 1.40 lakh women, Nasscom said, adding that of the 54 lakh workers, 20 lakh are women.
