Indian IT sector likely to hit $350 billion by 2026, says McKinsey report
The Indian information technology (IT) industry is expected to touch $300-350 billion in terms of revenue over the next five years, McKinsey has stated in its yet-to-be-released report. This means the industry will clip a growth rate higher than the 7.5 per cent that it has been growing in the last five years. Part of the report finding were discussed at the ongoing Nasscom Technology Leadership Forum.
Cloud and digital services will drive this growth, taking their total share to 50 per cent from the current 30 per cent. The McKinsey report also states that the digital and Cloud services segment is expected to be a $700-billion opportunity. Further, it adds that growth in Cloud and digital will witness an accelerated decline in the traditional services at 8-10 per cent per annum, compared to the 3-4 per cent seen in the last five years.
“This report lays the foundation of the growth drivers for the next 5-10 years. When we interacted with clients, we found that technology is central to their recovery from Covid. They believe that technology spends will bounce back in a big way,” said Noshir Kaka, senior partner at McKinsey and Company.
The report also stated that enterprise tech intensity likely to amplify to 5 per cent of revenues and tech natives, digital reinventors are expected to drive about 75 per cent of enterprise tech spend.
To be able to capture this growth, companies will need to rethink their strategy on the customer segment and service lines. McKinsey also pointed that tech business models are reshaping worldwide and IT industry need to refocus.
For instance, direct-to-consumer and ecosystems are expected to account for close to 40 per cent of global revenues, and drive $150-200 billion in technology spends.
The global economy is coalescing to 12 large ecosystems, this could account for about 20 per cent of global revenues by 2025. Though this will be dominated by B2C players, there is enough room for B2B players as well. McKinsey expects $100-125 billion of tech spends being made to enable this ecosystem.
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