The IT sector has been one of the least affected by the Covid-19 related economic downturn. Now the Indian tech industry is aiming for a year of growth.
A Step Back, Only to Jump Forward
A recent study published by the analysis and research firm Gartner reveals some largely expected numbers in the tech sector. After an almost natural contraction in 2020, of around 8.4% on an annual basis, the IT industry is expected to mark a year of growth in spending. Indian tech companies are expected to invest USD 81.9 billion, with enterprise software and IT services the leading segments in a recovery to almost pre-crisis levels.
Admittedly, it has been a difficult year for hardware manufacturers: total devices shipped declined globally by almost 14 percent, mostly over the first three Quarters of 2020 when the coronavirus lockdowns and overall uncertainty blocked consumer spending on tech gadgets. The smartphone market alone shrunk by roughly 10 percent, something unheard of in over a decade.
However, industry behaviour in the last months of 2020 reflects a growing conviction of many businesses that digitisation is the only way forward in a new global market paradigm.
Tech Spending as a Growth Enabler in a Digitised World
Many businesses took immediate advantage of the "new normal" - expanding online and offering flexible service packages to an uncertain customer base facing weeks at home. From small businesses showing their face for the first time online to leading Apps and services breaking all records during Spring lockdown, the market has evolved naturally to reward those who were ready for a swift digital transformation.
Not only work tasks moved online and in a remote regime, at home. Entertainment providers saw their contents appreciated over streaming and gaming platforms, traditional holiday gatherings saw andar bahar played online with family and friends. It was no surprise that soon after such initial yet lasting changes, many advertisers shifted their focus towards digital media, leaving traditional media behind. More and more Indians are discovering the advantages for gambling online directly on your smartphone and the website 10Cric.com has seen a significant increase in traffic during the past two years.
Most Indian CIOs (Chief Information Officers) read these signs well in advance. Mass digitisation is a key enabler for many industries and is based on a new kind of consumption pattern. It is no longer a question of containing potential negative impacts of lockdowns and disrupted logistics. Investing in IT and tech support is possibly one of the few ways out of a complex business climate.
In line with the "Digital India" campaign of the government - although not strictly because of it - desi companies have kept increasing their software, IT and communication services spending even over the past 10 months (growing at 7%, 3.7% and 4.9% respectively, YTD). But a further impulse directed towards enterprise software and data center systems will see spending grow stably into the next year, reaffirming India's role as a global digital player.
A "strong push" for 5G adoption and related services is also expected to help market growth in 2021, halting this year's decline in smartphone sales, the biggest in the history of mobile communications.