India Digital Transformation Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024-2030)

Indian Digital Transformation Market Size

The Indian digital transformation market generated revenue of USD 31.2 billion in 2023, and it is expected to progress with a CAGR of 25.1% during the forecast period 2024–2030. The market is primarily driven by the increasing adoption of the internet of things (IoT) and the surging manufacturing industry in the country.

With the overall growth in the Indian ICT industry, the country is projected to post positive adoption of digital transformation in the coming years, primarily in sectors such as BFSI, healthcare, e-commerce, and government, to improve productivity and customer services.

Implementation of ERP systems is registering rapid growth in India, as these systems provide better inventory control, wherein 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, and to increase the productivity.

In addition, complete customization is another advantage of the ERP system. Companies can implement several applications according to their business needs. Along with customization, the system also reduces repetitive manual processes and provides improved efficiency.

Thus, due to the various benefits of ERP systems, industries like manufacturing, financial services, automotive, healthcare, mining, logistics, steel, and pharmaceutical in India have already implemented ERP systems.

For instance, Infosys Limited, a technology company, has signed a contract worth USD 1.5 billion for about 15 years with a digital transformation services provider using its AI solutions and platforms.

The manufacturing industry has emerged as one of the high-growth sectors in India. According to the Ministry of Commerce and Industry, India will export goods worth USD 1 trillion by the end of 2030 and is on the way to becoming a major hub of manufacturing.

In addition, in 2014, the Government of India launched the ‘Make in India’ project to encourage companies to manufacture their products in India, which further buoyed the manufacturing industry in the country.

The use of digital manufacturing tools in the manufacturing industry is increasing rapidly to enhance productivity and product quality. Growing digital transformation such as the use of enterprise resource planning (ERP), IoT, and cloud is the key trend in the industry.

For instance, Bajaj Auto Ltd., implemented an ERP system to simplify its spare parts planning and distribution. Thus, presently manufacturing companies are adopting digital transformation for improved productivity. As a result, the surging manufacturing industry is driving India’s digital transformation.

Indian Digital Transformation Market Trends & Drivers

Increasing Adoption of Connected Cloud

• The adoption of a connected cloud has been observed to be one of the key trends in the market. Connected cloud offers a high degree of sophistication as data can be accessible from anywhere at any time. Further, by implementing cloud technology, organizations can manage a large number of applications and data in the cloud.
• Additionally, as cloud deployment requires no hardware upfront costs, cloud solution is preferred by SMEs, that are inclined toward entering the market landscape quickly with lower investments, which is further fueling the growth of cloud adoption. Thus, due to various advantages, Indian companies are currently moving toward connected clouds.
• Furthermore, companies of all sizes are using automation, which is simplifying the cloud administrators’ jobs by reducing costs & time and eliminating manual processes.
• This has transformed from being a company’s intranet-centric service to a cloud-enabled, productivity-oriented service. As a result, connected cloud is trending in digital transformation.

Increasing Adoption of IoT in India

• The increasing adoption of IoT in India is a key factor driving the digital transformation sector. IoT helps to make a product new by adding new functionality and features to it.
• This will provide a better consumer experience and is expected to create lucrative growth opportunities for industry players.
• Moreover, the government of India is on its way to developing smart cities all over the country, which is expected to drive the adoption of IoT in these cities.
• In addition, the Indian government launched “Digital India”, a flagship program with a vision to convert India into a digital country. These initiatives are expected to skyrocket the growth of IoT in every sector.

Security Concerns and Mistrust of Digital Technologies

• Security concerns and mistrust of digital technologies restraining the growth of digital transformation in the country. Effective digital transformation requires a collaborative effort across departments involving partners, stakeholders, and customers. Confidentiality, availability, and integrity of data are top priorities for businesses.
• In addition, a lack of security systems can result in where all the data would be at risk. When going for complete digital transformation at a company, servers and systems are expected to perform around the clock.
• Also, server crash-down leads to system downtime, due to which, access would be denied to the data stored in the server. This hampers the business operations, leading to missing project deadlines and other issues.
• Furthermore, businesses are also concerned about the effectiveness of the decision-making process, done by Artificial Intelligence (AI) and IoT. As a result, a lack of trust in new technologies is hindering the growth of the digital transformation.

In-Depth Segmentation Analysis

Offering Insights

• The solution category held the majority share, of around 75%, in 2023. This is because it is widely for digital transformation in India.
• With multiple modes of delivery such as private cloud, public cloud, and hybrid cloud, cloud computing has opened a lot of possibilities in terms of business models for large and small-scale enterprises.
• The major benefits include pay-for-service features, low initial investments, and efficient data management.
• Another major contributor to the cloud solutions market is the Government of India, which is expanding its e-governance initiative throughout the country and embracing cloud computing.
• E-governance through cloud computing optimizes the use of available resources and infrastructure, resulting in faster delivery of services and removing middlemen.
• Artificial Intelligence is gaining popularity among organizations. Similarly, the Indian government is rapidly adopting artificial intelligence and robotics for speech & image recognition.
• Businesses in India utilize the advantages of artificial intelligence with cab aggregators, digital assistants, biometric recognition, targeted advertisements, and online recommendations.
• Also, the BFSI sector has been one of the leading sectors in terms of AI adoption in the country, with a steep increase in implementation in the past five years owing to improved customer interaction requirements and prediction of potential risks.
• On the other hand, the services category is expected to witness the fastest growth, advancing at a CAGR of around 25.4% during the forecast period.
• This is due to the increasing digital initiatives and various government initiatives such as Smart Cities, Clean India, Digital India, etc.
• These initiatives are creating high growth opportunities giving further push to the services sectors namely communication, healthcare, environment, technology, energy, and banking, amongst others.
• Other noteworthy factors include increasing requirements for understanding customer sentiment and reliable infrastructure as well as improvement in the overall efficiency of the process, which is further augmenting the market in this category.

By offering, the market is divided into:

• Solution
  • Cloud
  • Big Data
  • IoT
  • AI
  • Mobility
  • Social Media
  • Others (include Blockchain, Cybersecurity, Machine Learning, Chatbots, AR/VR, and eSignature)
• Service
  • Training and Support
  • Professional Services

Enterprise Size Analysis

• Based on enterprise size, the large enterprises category accounted for the highest revenue share, of around 45%, in 2023. This is because large enterprises highly require enhanced adaptability and data safety, and they have the potential to invest in advanced technologies.
• Whereas, medium-scale enterprises are the fastest-growing category in the country’s digital transformation market. These enterprises, being less capital-intensive and more employment-friendly, have easier access to raw materials, subsidies, and other incentives under cluster programs offered by the government.
• The country has huge growth potential to create and enhance the capacity of these enterprises both in the manufacturing and service sectors by using available resources.
• They have tremendous growth potential, owing to the increasing ICT penetration as well as technological access to rural and semi-urban populations.
• Transformation service providers are steadily working toward tailor-made solutions, with an enhanced focus on agriculture, healthcare, utilities, and education.

Further, the following enterprise size categories are covered in the report:

• Small Enterprises
• Medium Enterprises (Fastest-Growing Category)
• Large Enterprises (Largest Category)

Vertical Insights

• Among verticals, BFSI is the largest and fastest-growing category. This is due to the rising focus on making a consumer-oriented interface and the increasing attention of the financial sector on providing pillars to enhance the consumer retention rate.
• Similarly, digital transformation provides opportunities for retailers to engage better with customers, reduce operational costs, and improve revenue as well as margins.
• The retail sector in India is set to become one of the biggest beneficiaries of digital transformation in the upcoming digital era.
• The major factor behind this is rising awareness regarding digitalization among retailers in the country. Majority of the retailers view digital transformation as a facilitator of better operational efficiency and customer service, leading to an increased implementation of digital technologies such as cloud and big data analytics.
• Along with this, large-scale retailers are working to shape a long-term sustainable business model based on future disruptive technologies such as artificial intelligence, mobility, and IoT.

The following verticals are covered in the report:

• Banking, Financial Services, and Insurance (BFSI) (Largest and Fastest-Growing Category)
• Manufacturing
• Retail
• Transportation and Logistics
• Telecom and Information Technology (IT)
• Healthcare
• Oil and Gas
• Energy and Utilities
• Others (Hospitality, Tourism, and Construction)

South Region Leads the Indian Market

• Based on region, South India accounted for the largest revenue share of around 50% in 2023. The regional market is further expected to register the highest CAGR during the forecast period.
• This is due to the presence of major IT hubs in the country such as Bengaluru, Mangalore, Mysuru, Trivandrum, Kochi, and Chennai. With around 20% of the total Indian population, the region accounts for more than 30% of the country’s tax revenue collection.
• The Smart Cities Mission by the Government of India is enabling significant investments in the region, with Amravati in Andhra Pradesh being noteworthy owing to its proposed infrastructure.

Geographically, the following regions are covered in the report:

• South (Largest and Fastest-Growing Regional Market)
• North
• West
• East

Market Nature - Consolidated

The intensity of rivalry in the Indian 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.

India Digital Transformation Industry News

• In February 2024, Wipro Limited, a technology services and consulting company, announced the migration of the largest data center of ManpowerGroup's in Europe to Microsoft Azure.
• In April 2023, Kellton Tech Solutions Ltd., a provider of digital technology solutions and services, launched the Kverse Customer Experience Center and Innovation Lab in Gurgaon.