India's Tech SME Sector Revenue to Touch $40 Billion by FY30 By CIOTechOutlook Team

India's Tech SME Sector Revenue to Touch $40 Billion by FY30

CIOTechOutlook Team | Tuesday, 28 March 2023, 11:55 IST

As per Nasscom estimate, the revenue of Indian tech small and medium-sized enterprises (SME) is expected to increase by double digits and reach $40 billion by FY30.

The tech SME sector is anticipated to contribute 7-9% of the $15–$20 billion in overall FY23E tech industry revenue, up from the pre–pandemic share of 4-6% due to increased tech demand.

Based on a survey by Nasscom and ProHance, the Indian tech SME sector is expected to have 740,000 people at the end of FY23, with hiring for digital skills expanding twice as quickly as hiring for traditional tech expertise in FY20.

Key digital skill areas for the industry in FY23E include the cloud, digital engineering services, advanced AI/ML and analytics, IoT, and Blockchain.

"The Indian tech sector has more than 10,000 SMEs dedicated to provide traditional and digital services to tech buyers globally as well as domestic," Nasscom President Debjani Ghosh said.

"Fast tracking innovation, supportive government policies and incentive schemes and dedicated SME-industry-academia connects will further augment the sector's growth and help achieve double digital revenue growth vision by FY30E," she added.

Also broadening its digital offerings internationally is the India tech SME sector.

The revenue of Indian tech SMEs comes from North America, with a concentration on specialised cloud, AI, IoT, and SaaS technologies.

In FY23E, the domestic market comes in at 17–18%, and Europe comes in at 19–20%.

SMEs have also extended their footprint in the APAC area by breaking into the unconventional Japanese and Australian markets and are looking towards furthering their penetration into Middle Eastern countries like the UAE and Saudi Arabia.

Increased investment in cloud, migration, SaaS, and AI-based solutions has caused the number of digital technology SMEs to grow significantly since FY19, by a factor of four.

While experiencing fast growth as a result of IT modernization and rising digital demand, the digital tech SMEs still have a lower base of operations than the traditional SME sector.

"Lack of leadership pipeline, limited enterprise clients, and no sustained product innovation are some of the growth headwinds faced by tech SMEs today, resulting in slower growth and range-bound pricing," the report mentioned.