India added more than 1,600 tech startups in 2020, making it the third-largest tech startup hub in the world, industry body Nasscom said in its Strategic Review 2021 titled ‘New World: The Future is Virtual’.
This is the highest addition in three years and takes the total number of tech startups to 12,500, including 12 new unicorns.
The overall Indian technology sector grew 2.3% year-on-year (y-o-y) on the back of rapid acceleration in digital transformation and tech adoption, though global output is estimated to have shrunk by 3.2% as a result of the fallout of the covid-19 pandemic.
Indian tech contributed about 8% relative share to the national gross domestic product (GDP), despite headwinds in 2020, with 52% relative share in services exports and 50% share in total foreign direct investment (FDI) based on inflows from April to September 2020.
Despite the downturn, Indian tech industry continues to be a net hirer with significant focus on digital upskilling, Nasscom said. The industry is expected to add more than 138,000 net new hires in FY2020-21, taking its total employee base to 4.47 million in the financial year. The digital talent pool is expected to cross 1.17 million, growing at 32% over the last year.
As much as 95% of chief executive officers (CEOs) expect 2021 hiring to be more than that in 2020, according to a CEO survey by Nasscom. Further, 67% CEOs believe that the Indian technology industry will grow significantly higher than it did in 2020.
Investing in digital continues to rise as an imperative for the industry, with organizations building their capabilities and aligning business models to digital practices. Digital contributed 28-30% of the total revenues of the industry.
Domestic digital adoption intensified in 2020, in sync with the government’s push for Atmanirbhar Bharat or self-reliant India. The Indian domestic market, driven by hardware-led demand, continued to show resilience, growing at 3.4% in the year. With an increased focus on innovation, more than 115,000 tech patents were filed by companies in India in the last 5 years.
“Digital transformation is the topmost priority for global corporations and in a highly connected world that will remain largely contactless for an extended period, there are shifts in business models, customer experience, operations, and employee experience,” said U.B. Pravin Rao, chairman, Nasscom.
Enterprises are re-balancing their technology spends to prioritize digitization. The industry saw an overall shift of 10% in outcome-based pricing. Offshore witnessed more than a 4% shift in 2020 and the attrition rate dropped by 50% in H2 2020 compared to H1 2020. The industry witnessed 146 merger and acquisition (M&A) deals in 2020, 90% of which were digitally focused.
Cloud adoption in companies rose 80% during H1 FY2021 compared with H2 FY2020. Further, Continental Europe and Asia Pacific emerged as one of the strongest growth geographies in FY2021. Banking, financial services and insurance (BFSI) and healthcare were key growth verticals during the year.
“As we look at 2021, while there are positives on the vaccination front and accelerated digitization across verticals, the technology industry in India is well geared to build on these trends and continue its transformation journey in this re-defined techade,” said Debjani Ghosh, president, Nasscom.