NEW DELHI : Small and medium-sized enterprises (SMEs) in the Indian tech industry are likely to generate revenues of $35-40 billion by FY30, a sharp rise from $15-20 billion in FY23, industry body Nasscom said on Tuesday.
Digital tech SMEs, which offer cloud services, advanced analytics, and AI solutions, will comprise 35-40% of the overall tech SME revenues by FY30, up from 21% in FY23, Nasscom said in its “Indian Tech SMEs” report. India’s overall tech industry is expected to double revenues to $500 billion by FY30.
As per Nasscom, 60% of the tech SMEs are BPOs, while 20-25% are in IT services, and 15% offer software products and software-as-a-service (SaaS). The industry body defines tech SMEs as firms who mainly offer legacy IT, BPM, and subcontracting services, while digital tech SMEs are those that offer cloud and digital transformation services and have also ventured into advanced analytics and AI/ML.
The report showed that 75% of tech SMEs’ customers are either small and midsize businesses (SMBs) in India or foreign tech SMEs. Majority of these tech SMEs are still dependent on their founder networks for business opportunities.
The report also showed that the number of people working for tech SMEs in India is expected to grow at a compound annual growth rate (CAGR) of 10.1 % from over 550,000 in FY20 to 740,000 in FY23. It also found that 70% of the workers in tech SMEs are located in the six cities of Delhi, Mumbai, Hyderabad, Bengaluru, Chennai, and Pune, while 22-25% are from growing hubs such as Jaipur, Coimbatore, and Trivandrum.
In terms of spending, three out of four tech SMEs had minimal or zero marketing budgets. Their spending on R&D was as low as 0.1-0.2%, while the more successful ones spent 3-5% of revenues on R&D.
“The Indian tech sector has more than 10,000 SMEs dedicated to provide traditional & digital services to tech buyers globally as well as domestically,” said Debjani Ghosh, president, Nasscom. She said traditional tech SMEs’ shift to digital services is imminent.
Nasscom forecast digital growth to outpace demand for traditional tech SMEs. Demand for emerging tech will disrupt many legacy services, impact existing roles and skills, and lead to more flexible hiring arrangements.
“Supportive government policies, incentive schemes and dedicated SME – industry–academia connections will further augment the sector’s growth and help achieve double digital revenue growth vision by FY30E,” Ghosh said.
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