Sangeeta Gupta, Senior Vice-President and Chief Strategy Officer of Nasscom, says the IT industry is on the path to recovery and growth. In an interaction, she highlighted some segments that are growing at a faster pace. Excerpts:
How was the year like for the IT industry, particularly in the backdrop of the macroeconomic and geopolitical issues?
I would say it was a mixed year for the IT industry. The global macroeconomic uncertainties impacted decision-making in large global businesses that outsource work to India. It impacted discretionary spending, so you would see a muted growth this fiscal year.
We see some slow recovery. So, if we track data from listed public companies, you would see that from a negative of 1 per cent in the first half of 2024, we had a growth of 2.6 per cent in 2025. Headcount, which was negative or just marginally flat in the first half of 2023-24, grew a little in 2024-25. Some of the key verticals like banking and financial services, manufacturing, and retail, all of which were declining in 2023, started witnessing a slow growth in 2024.
The trend in 2024 was AI, with particular reference to generative AI. Have these two sectors – AI and Gen AI – become good enough to bring in good revenues for IT services companies?
The pace of AI innovation is growing in India. There are almost 240-plus Gen AI start-ups in India. If I just track AI and Gen AI activity by some of India’s large tech services companies, it is growing 5x or 6x. This could be through platform buildout. It could be through partnerships.
There is a range of applications that are getting built both by new companies coming up in the Gen AI wave, as well as existing companies that are infusing AI into their offerings.
However, when it comes to revenues from AI and Gen AI adoption, I think at scale, particularly in global enterprises it is still relatively slow. The real adoption at scale is still lagging. Some of the reasons are global slowdown and people getting very cautious about discretionary spending, and large data silos within organisations. To get the best out of AI and GenAI, I first need to put my data in place. Data engineering, data cleaning up, data annotation, and everything related to data is actually five times more than the AI opportunity. The real AI opportunity is probably still 12 to 18 months in the making but you’re seeing a gradual uptick.
What is the outlook for 2025 for the IT industry?
We are putting together our analysis. We are talking to a lot of people, and will publish a detailed insight at our annual event in February, 2025. The initial discussions with stakeholders point to at least a little more optimism than what we saw in 2024. We are not going to be in hockey-stick growth. It is going to be a slow recovery in 2025. We are looking at sectors that will grow. Everything in the IT industry may not grow at the same pace. We do expect 2025 to be better than 2024 – of course, if there are no untoward global incidents.
Leave a Comment