Progressing to Seize Emerging Opportunities

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OPERATING ENVIRONMENT

PROGRESSING TO SEIZE EMERGING OPPORTUNITIES

The world is evolving rapidly led by a dynamic geopolitical environment, pace of technological innovation, data proliferation, and disruptive market forces. These are necessitating companies to build resilience and become more agile in response. At Happiest Minds, we are rethinking our approach to do business and maximize opportunities to drive our long-term growth.

Economic Scenario

We are operating in a Volatile, Uncertain, Complex, and Ambiguous (VUCA) world. 2022 was yet another year marked by challenges like rising geopolitical tensions, rising inflation and interest rates and supply chain disruption, which impacted the economic activities and trade globally. The global GDP is estimated to have grown at a much subdued 3.4% in 2022, as per IMF.

Despite the challenges globally, the Indian economy remained resilient, recording an expected GDP growth of 6.4% in FY 2022-23. It is expected to remain agile and continue its growth trajectory in FY 2023-24 with improved consumer confidence and high-capacity industrial utilization.

Overall, the geopolitical situation in the world during 2023 is likely to be complex and multifaceted, with a range of political, economic, environmental, and social factors continuing to influence the global landscape.

Digital Gains Momentum in India

The growth in the Indian economy is being greatly driven by accelerated digital adoption and the need for a digital transformation, with customer-centricity for retention taking the spotlight. It is therefore necessary for technology and service providers to assess the impact of emerging technologies and trends on their business and align with clients to remain competitive.

As per NASSCOM’s Annual Strategic Review report, within India, technology revenue is expected to grow by 8.4% to cross US$245 billion in FY 2022-23. The industry continued to be a net hirer, adding an expected 2.9 lakh employees this year, offering a value proposition of diverse ecosystem, young and high-quality talent pool, excellent physical and digital infrastructure, vibrant domestic market, and strong Government support. As per Gartner’s ‘Emerging Technology Horizon for IT Services, 2021’ report, the demand for IT services is expected to accelerate due to the challenges in orchestrating technologies, people, and processes. It further identifies four key themes that are critical for product leaders to evaluate their competitive strategy: digital ecosystem, hyper automation, resilient delivery and culture and people. Deloitte Insights also highlights the importance of emerging technologies as-a-service in building and maintaining a competitive edge. Service-based IT allows adopters to access cutting-edge features and technologies, which is especially important as SaaS becomes more ubiquitous.

6.4%

GDP growth in FY 2022-23

Key trends are shaping the IT industry:

Increase in Technology Spend

Information Technology and Business Process Management (IT-BPM) is a growing industry with significant investment over the past few years. According to industry reports, the global IT-BPM market is expected to reach US$3.3 trillion by 2025, growing at a CAGR of 8.4%. This growth can be attributed to the increasing adoption of automation and digital technologies, as well as the rise of outsourcing and offshoring. India is one of the leading players in the IT-BPM industry, with a market share of over 55%. The country has and continues to attract significant investments from global corporations due to its skilled workforce, low labor costs, and favorable government policies. As per a recent report by NASSCOM, IT-BPM exports from India are expected to reach US$194 billion by 2025.

Urgency for Business Transformation

Unprecedented challenges across the global landscape along with the rising challenges are necessitating companies to become more agile and resilient. This has driven the urgency among them for selective digital transformation, adoption of automation and digital technologies to optimize their processes, improve efficiency, and achieve cost efficiency. Technologies with ground-breaking business implications include artificial intelligence (AI), augmented reality (AR), blockchain, drones, the Internet of Things (IoT), robotics, 3D printing, and virtual reality (VR).

Rise of Emerging Technologies

The IT industry is witnessing rising usage of emerging technologies such as artificial intelligence (AI), robotic process automation (RPA), big data, generative AI, blockchain and cloud services which are being embraced by both customers and companies. Cloud microservices platforms are projected to generate US$4.2 billion in revenue by 2028, up from US$952 Mn in 2020.

Further, other technology big bets like sensor tech, smart robots, autonomous driving, computer vision, deep learning, autonomous analytics, AR/VR, sustainability tech, edge computing, distributed ledger, space tech, and 5G/6G are areas where enterprise spend is expected to grow 2x higher than average. Investments in India in these sectors are expanding at 31% CAGR, driving a huge surge in the number of innovative start-ups in these areas and positioning the country attractively to benefit from the opportunities.

Outsourcing and Offshoring

Outsourcing and offshoring have been key drivers of growth in the IT-BPM industry. Companies are increasingly outsourcing their business processes to third-party service providers, which helps them to reduce costs and improve efficiency. The availability of cost-effective, yet skilled talent pools in countries like India, the Philippines, and China has made them popular destinations for offshoring, attracting significant investments from global corporations.

Addressing the Most Critical Matters