India's Tech SMEs: Pioneers of Digital Transformation and Global Expansion
A report by nasscom and ProHance sheds light on the rise of Indian tech SMEs and their potential in the global digital arena.
Indian tech SMEs are embracing digitalization, offering innovative solutions, and driving growth in the country's tech sector. The recently launched report, "India's Tech SMEs: Rising in the Global Digital Arena," explores the current status and potential of these SMEs and emphasizes the need for a digital-first approach to overcome challenges.
Digital Solutions for Global Clients
Tech SMEs play a vital role in the Indian tech industry and are increasingly providing digital solutions to clients worldwide. The report forecasts that in FY23E, the sector will contribute 7-9% to the overall tech industry revenue, amounting to $15 billion - $20 billion. This growth surpasses the pre-pandemic share and showcases the sector's diversification across geographies. Notably, North America accounts for 50-55% of the revenue, with a focus on niche cloud, AI, IoT, and SaaS products. Europe follows at 19-20%, while the domestic market contributes 17-18% in FY23E. Tech SMEs are also expanding their presence in non-traditional markets such as Japan, Australia, and the Middle East.
Digital-first Approach and Growth Potential
Debjani Ghosh , President of nasscom , emphasizes the importance of embracing digital services for traditional tech SMEs to navigate current headwinds. The report suggests that accelerating innovation, implementing supportive government policies and incentives, and fostering connections between SMEs, industries, and academia will drive growth and help achieve the vision of double-digit revenue growth by FY30E.
Growing Digital Talent
The Indian tech SME sector is projected to employ around 740,000 individuals by the end of FY23. Notably, hiring for digital skills is outpacing traditional tech talent growth, with areas like Cloud, Digital Engineering Services, Advanced AI/ML & Analytics, and IoT & Blockchain driving the demand for digital talent in FY23E.
Addressing Growth Headwinds
Despite their rapid growth, tech SMEs face challenges such as limited enterprise clients, a lack of sustained product innovation, and a lower operational base compared to traditional SMEs. The report suggests several strategies to address these challenges and enhance competitive positioning. These include fast-tracking innovation, developing favorable government tech procurement policies, improving financing and credit access, expanding global showcases, and fostering connections between SMEs, industries, and academia.
Conclusion
Indian tech SMEs are at the forefront of digital transformation and are poised for global growth. With the right strategies, support, and collaborations, these SMEs can overcome obstacles and continue driving innovation in the tech sector, contributing to India's vision of becoming a global tech leader.
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