India on course to be the new tech superstar

India’s $2.1 trillion economy has become the third-largest in Asia and its tech industry is booming. India’s IT-BPO industry body, Nasscom (National Association of Software and Services Companies), claims it will become the second biggest tech startup ecosystem on the planet across the next two years.

The country is already among the fastest growing IT services markets in the world. It accounts for approximately 52 per cent of the $124-130 billion market tech outsourcing market. The $100 billion Indian software services industry employs around 3 million staff and is forecast to grow at 13-15%.

India boasts a growing position as a tech center. The country’s scientific output has doubled in the last decade, and research budgets have grown up to 25 per cent a year according to Nesta.

rapid startup growth

The booming startup scene is fed by government initiatives such as the Prime Minister’s ‘Digital India’ mission, and funds including the $250 million ‘Innovate in India Fund’ recently launched by India’s second largest IT company, Infosys. Not only this, but India’s highly educated workforce and its plans to create over 100 tech-friendly “smart cities” are also attractive to technology firms.

More than 800 new tech firms launched in 2014 in India, much faster than Britain and Israel, which are ranked between India and worldwide leader US at present.

“By 2020, total number of technology startups and product companies will be around 11,500, employing about 250,000 people from the current 65,000 people,” Nasscom Chairman R Chandrasekaran said.

Eager to take a slice of all this start-up activity, India has become a hot destination for accelerators and incubators. You’ll find over 70 private equity and venture capital funds and 80-plus technology incubators and startup accelerators there right now.

M&A activity is also intensifying in India’s vibrant tech sector. In recent weeks Twitter has agreed to acquire India’s mobile marketing start-up, ZipDial and Alibaba has taken a large stake in mobile payment firm, Paytm.

established industry

India’s wide experience in tech development is also of great interest to established firms, as is the ready availability of large numbers of highly educated tech-savvy staff. For example, Dell India hired over 400 engineers to work for its research and development team last year and plans to hire hundreds more in 2015.

India’s growing importance to US tech firms has spawned significant moves, including a joint US/India government Technology Summit and a range of other partnerships. China, the UK and other countries have similar initiatives.

The country is “renowned for its technology leadership, focus on innovation and entrepreneurial spirit,” said Rob Reeg, President, MasterCard Operations and Technology. Hitachi, MasterCard, Lowes and Visa are or have recently opened tech centers in India. Walmart, Tesco, Target, Microsoft, Quark, Orange Business, Intel and Amazon already have centers there. India is a tech industry Who’s Who

future developments

Looking to the future, Nasscom says that India’s startups are focusing on wearable technologies, big data and analytics, augmented reality, cloud computing and the hardware, education, advertising and healthcare sectors.

Gartner expects India will have at least five IoT startups with a billion dollar valuation by 2018. However, Anshul Gupta, principal research analyst at Gartner points out that “Indian enterprises are at an early stage of understanding the impact of Internet of Things (IoT) technologies on their core business.”

Based on patent activity, the most recent Thomson Reuters 2014 State of Innovation India report has found that the largest individual sector for innovation in India is Computing & Control for the first time, followed closely by Pharmaceuticals.

“India is an important global innovation hub, with both local and global organizations conducting critical R&D activities,” said Thomson Reuters’ Pradeep Lankapalli. “Patenting activity is growing rapidly and this has a direct impact on the country’s economic growth.”

That’s certainly the experience at Dell. That company’s R&D center (which employs 2,500 people) is its largest outside of the US and has already become the largest contributor to software patents for the company.

It’s a two-way street, of course: software and technology services are India’s second biggest foreign revenue earner. They accounted for 8 percent of its GDP in the last fiscal year, a big transformation for an economy previously dominated by agriculture and manufacturing. That transformation seems set to continue as the industry is predicted to grow by 12-14 percent in 2015-16.

India’s experience in moving from a business process outsourcing hub to a major technology player shows the value of focusing on skills and innovation in the long term.

Read more about Orange Business in India, see the Orange Major Service Center (MSC) in action in Guargon, India and find about the Orange innovation focus.