Image Source: Unsplash

India’s synonymous relationship with excellence in the field of technology is well known. This includes a notable roster of Indian-origin CEOs at the helm of global technology companies such as Adobe, Alphabet, IBM and Microsoft.¹ This leadership is not only seen in companies abroad but also within India’s own borders, building on its reputation as a worldwide hub for IT and software development outsourcing.

India’s IT spending is forecast to grow by 10.7% in 2024, reaching USD 124.6 billion, rebounding after a decline in 2023. This will be, in part, driven by artificial intelligence and automation aimed at improving operational efficiency and addressing IT talent shortages. Software and IT services spending in India is expected to see the highest growth rates in 2024, up by 18.5% and 14.6%, respectively.² Some 92% of Forbes Global 2000 companies use IT outsourcing, suggesting continued demand for India’s IT services on a global scale.³ India retained the top spot in the 2023 Global Services Location Index rankings, an indicator of the country’s attractiveness for hosting offshore business services.⁴

However, India’s digital strategy transcends its established IT sector, focusing on a nationwide transformation into a digitally advanced society. India’s internet economy, valued at around USD 175 billion in 2022, is projected to experience significant growth, reaching USD 1 trillion by 2030.⁵ This shift is guided by the “Digital India” campaign, aiming to upgrade online infrastructure, expand connectivity and digitize public services for its citizens.⁶ Last year, India’s population—approximately 1.43 billion people at the end of April 2023—surpassed China and became the world’s most inhabited country.⁷

The “India Stack,” a comprehensive suite of Application Programming Interfaces (APIs), is also facilitating innovation in digital payments, identity verification and data/service delivery. With billions of mobile transactions monthly and some 67 billion digital identity verifications, supported by platforms like Aadhaar, UPI and DigiLocker, India is marking its position as a global champion in open API technology.⁸

These technologies have been critical in supporting India’s push toward digitalization across various sectors, not just IT and software. For instance, they have allowed financial services to innovate with digital wallets and online transactions, healthcare services to improve with digital records and telemedicine, and educational services to expand through online platforms and digital content.

Launched last year, the S&P India Tech Index serves as a barometer of the performance of India-based companies engaged in digital technology, software and communications. The index uses FactSet’s RBICS revenue data to identify companies across selected activities that are integral to the digital economy. This approach captures not only standard IT functions such as enterprise software and consulting, but also extends to specialist operations like data centers, financial software and electronic payment services, offering a comprehensive view of companies driving the digital ecosystem. By applying a strict 90% revenue threshold for eligibility, it also ensures that only companies with a substantial digital footprint are included.

(Click on image to enlarge)

As Exhibit 1 highlights, the index brings together conventional IT companies with names from the Communication Services, Financials, Consumer Discretionary and Industrials sectors. The combination of India’s youthful, tech-savvy demographic—almost two-thirds of the population is under the age of 35—and a rising middle class is a powerful catalyst for the surging demand for and increasing spend on digital services across the country.⁹

(Click on image to enlarge)

Exhibit 2 shows that fintech, consumer-tech and other technology-led startups that span multiple sectors have secured more funding in India than traditional enterprise software-as-a-service (SaaS) businesses in recent years.¹⁰

India’s tech narrative goes well beyond its traditional IT expertise. To accurately measure the evolving Indian technology landscape through indices, a nuanced approach is necessary—one that acknowledges the broader, more inclusive definition of what constitutes a technology company today and looks ahead longer term.

¹ The Economic Times (2023). 21 Indian-origin CEOs of billion dollar companies. Available at: https://economictimes.indiatimes.com/nri/work/sundar-pichai-satya-nadella-ajay-banga-arvind-krishna-and-20-other-indian-origin-ceos-of-billion-dollar-companies/sundar-pichai/slideshow/105593531.cms

² Gartner (2023). Gartner Forecasts India IT Spending to Grow 11% in 2024. Available at: https://www.gartner.com/en/newsroom/press-releases/2023-11-28-gartner-forecasts-india-it-spending-to-grow-11-percent-in-2024

³ ISG (2019). 2019 ISG Momentum® Market Trends & Insights Geography Report. Available at: https://ei.isg-one.com/Research/GoToDocument?dashboardID=201a11ca-c115-4a33-a9f7-941eceefbbd1&code=2019-Momentum-Geography-Report&isLocked=True

⁴ Kearney (2023). The 2023 Kearney Global Services Location Index: Regenerative talent pools. Available at: https://www.kearney.com/service/digital-analytics/digital/gsli/2023-full-report

⁵ Google, Temasek and Bain & Company (2023). The e-Conomy of a Billion Connected Indians. Available at: https://www.bain.com/insights/e-conomy-india-2023/

⁶ India Brand Equity Foundation (2024). Digital India. Available at: https://www.ibef.org/government-schemes/digital-india

⁷ United Nations (2023). Department of Economic and Social Affairs Economic Analysis. UN DESA Policy Brief No. 153: India overtakes China as the world’s most populous country. Available at: https://www.un.org/development/desa/dpad/publication/un-desa-policy-brief-no-153-india-overtakes-china-as-the-worlds-most-populous-country/

⁸ IndiaStack (2024). Available at: https://indiastack.org/index.html

⁹ World Economic Forum (2019). This is how India can become the next Silicon Valley. Available at: https://www.weforum.org/agenda/2019/10/india-technology-development-silicon-valley/

¹⁰ S&P Global (2023). Startups Riding Digital Infrastructure Could Transform Indian Economy. Available at: https://www.spglobal.com/en/research-insights/featured/special-editorial/look-forward/startups-riding-digital-infrastructure-could-transform-indian-economy

More By This Author:

Magnificent Mid Caps And Sensational Small Caps
2024 World Economic Forum: Key Themes to Watch
S&P DJI Kensho Goes Global