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India Digital Transformation Market Overview
India digital transformation market is estimated to value $24.5 billion in 2018, and is expected to grow at a CAGR of 74.7% during 2019-2024. The market is primarily driven by increasing adoption of internet of things (IoT), and surging manufacturing industry in the country. With the overall growth in Indian ICT industry, the country is anticipated to post positive adoption of digital transformation in the next five years, primarily in sectors such as BFSI, healthcare, e-commerce and government, to improve productivity and customer service.
Based on enterprise size, India digital transformation market is segmented into large (more than 251 employees), medium (51 to 250 employees), and small enterprises (less than 50 employees). Among these, large enterprises category accounted for highest revenue share in the market. The category has played a significant role in shaping digital transformation market in India. Due to dominant financial position, large enterprises are well-suited to implement digital strategy across operations and accelerate transformation in sectors such as BFSI, healthcare, consumer goods, and education. Additionally, large enterprises play a key role in forwarding technology-driven ideas and promoting digital awareness.
Based on vertical, India digital transformation market is categorized into Banking, Financial Services and Insurance (BFSI), manufacturing, retail, transportation and logistics, telecom and IT. Among these, BFSI is one of the largest and fastest growing category. This is attributed to the increasing inclination of organizations toward customer satisfaction as well as digital operating models.
Banks are increasingly focusing on making processes more customer-centric and developing new user interface. BFSI sector further needs to accelerate its digital transformation and reconfigure each channel to serve customer needs. Increasing customer interactions, productivity along with the need to enhance digital service offerings and transform into effective digital organizations are the major factors expected to provide growth to the BFSI digital transformation market in the country over the next decade.
Based on region, the India digital transformation market is categorized into North, South, East and West regions. Among these, South India is the largest and fastest growing digital transformation market in the country. South India region accounts for major IT hub penetration in the country, with leading cities such as Bengaluru, Mangaluru, Mysuru, Trivandrum, Kochi, and Chennai. Also, the region has been successfully implementing several industrial and technological initiatives, owing to a rapid growing economy and peaceful industrial relations with conglomerates.
Digital Transformation Market Dynamics
The key trend observed in India digital transformation market include the implementation of Enterprise Resource Planning (ERP) systems. ERP system provides better inventory control, wherein the companies can monitor inventory levels on a daily basis, including raw materials, work-in-progress reports, finished goods reports, future consignments that are yet to be received, and inventory currently in transit, companies are adopting ERP systems to increase the productivity. Along with customization, ERP system also reduces repetitive manual process, and provides improved efficiency. Thus, due to various benefits of ERP systems, industries such as manufacturing, financial service, automotive, healthcare in India have already implemented ERP systems.
The key factor contributing to growth of India digital transformation market include surging manufacturing industry in India. Manufacturing industry has emerged as one of the high growth sectors in India. As per the second advance estimates of annual national income published by the Government of India, between FY12 and FY18, the Gross Value Added (GVA), a basic current price, from the manufacturing sector in India grew at a CAGR of 4.3%. In addition, in 2014, the Government of India launched ‘Make in India’ project to encourage companies in order to manufacture their products in India, which further to drive the manufacturing industry in the country.
The use of digital manufacturing tools in the manufacturing industry is increasing rapidly to enhance the productivity, and product quality. Growing digital transformation such as use of Enterprise Resource Planning (ERP), IoT, are the key trend in the manufacturing industry. For instance, Bajaj Auto Ltd, implemented ERP system to simplify its spare parts planning and distribution. Thus, manufacturing companies are adopting digital transformation for improved productivity. As a result, surging manufacturing industry is driving the India’s digital transformation.
The key opportunity in India digital transformation market includes rising number of micro, small and medium enterprises (MSME) in the country. Increasing MSME in India would provide opportunities for players in digital transformation market. As of 2018, in India, there were nearly 30 million SMEs, that grew about 8% as compared to 2017. MSMEs accounts for almost 95% of establishments, and provide around 80% of jobs in the manufacturing sector in India. Due to limited capital capability and lack of awareness regarding the potential benefits, presently adoption rate of digital transformation among MSMEs is not very high. But, as digital transformation can reduce operational cost of companies, improve efficiency and productivity, its adoption among MSMEs expected to increase in the coming years, thus posing opportunities for market players.
India Digital Transformation Market Competitive Landscape
The intensity of rivalry in India digital transformation market is moderate. With increasing competition and new entrants in the market, the focus of major players is shifting toward content differentiation and customization. In the recent past, mergers & acquisitions, and product & service launches are the recent activities of key players in the market.
Some of the key players operating in India digital transformation market includes Wipro Limited, Kellton Tech Solutions Ltd., Sasken Technologies Ltd., Cognizant Technology Solutions Corporation, Clarion Technologies, Inc., Datamatics Global Services Limited, Mindtree Limited, Tech Mahindra Limited, Accenture plc, Dell Technologies Inc., Cisco Systems Inc., International Business Machines (IBM) Corporation, Microsoft Corporation, Tata Consultancy Services Limited, Infosys Limited., and HCL Technologies Limited.