By Jaydeep Saha, Contributing Writer, HCL Technologies Ltd. 


After overtaking the United Kingdom to become the fifth largest economy in the world, a recent research report by the State Bank of India (SBI) said India is expected to exceed the GDP of Germany by 2027 and Japan by 2029 at the current rate of growth.

According to the data from the International Monetary Fund, India’s economy of approximately $854 billion ranks behind the US, China, Japan, and Germany in terms of the size of its economy in ‘nominal’ cash terms. A decade ago, India was eleventh and the UK was fifth.

“India’s GDP growth in Q1 FY’23 was 13.5 percent. At this growth rate, India is likely to be the fastest growing economy in the current fiscal year. Interestingly, even as the estimates of India’s GDP growth rate for FY’23 currently range from 6.7 percent to 7.7 percent, we firmly believe that it is immaterial. In a world that is ravaged by uncertainties, we believe 6-6.5 percent growth is the new normal,” said Soumya Kanti Ghosh, chief economist at SBI, who authored the report.

“Nevertheless, we urge an update to the outdated IIP (Index of Industrial Production) that is composed of a 2012 set of products. For example, the IIP basket does not contain handset exports that are now produced by companies like Foxconn in India. Nokia’s handset manufacturing facility at Chennai was closed in 2014. That facility is now producing 5G radio sets. We believe that manufacturing growth in India will see an upward revision once this is completed,” Ghosh added.

Role of the IT industry

In November 2021, Piyush Goyal, the Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, lauded the Indian IT sector for expanding its competitive strength with zero government interference. Service exports from India has the potential to reach $1 trillion by 2030, said Goyal.

The IT & BPM sector has become one of the most significant growth catalysts for the Indian economy, contributing significantly to the country’s GDP and public welfare. The IT industry accounted for 8 percent of India’s GDP in 2020, and it is expected to contribute 10 percent by 2025.

Major highlights
  • According to NASSCOM, the Indian IT industry’s revenue reached $227 billion in FY’22, a 15.5 percent YoY growth

  • Gartner estimates that IT spending in India is expected to increase to US$ 101.8 billion in 2022 from an estimated $81.89 billion in 2021

  • The Indian software product industry is expected to reach $100 billion by 2025 as Indian companies invest internationally to expand their global footprints and enhance their global delivery centers

  • The data annotation market in India is expected to reach $7 billion by 2030 due to the accelerated domestic demand for artificial intelligence (AI)

  • Exports from the Indian IT industry reached $149 billion in FY’21. Export of IT services has been the major contributor, accounting for more than 51 percent of total IT export (including hardware). The Business Process Management (BPM), Engineering and R&D Services (ERS), and software products exports accounted for 20.78 percent each. The ERS market is expected to grow to $42 billion by 2022

  • The IT industry added 445,000 new employees in FY’22, bringing the total employment in the sector to 5 million employees

  • Indian IT and Business Services (ITBS) industry is expected to grow to $19.93 billion by 2025

HCL Technologies’ major highlights (in FY’22)

HCL Technologies recently became the third largest India-based IT organization, exceeding Wipro in terms of revenue, profits, and market capitalization. Outlined below are some major corporate and financial highlights from FY’22, which reflect the growth of Indian IT:

  1. Strong Booking performance: For full year FY’22, total contract value of new deal wins at $8.3 billion, a 14 percent YoY growth

  2. Services Revenue (ITBS and ERS) exceeded the $10 billion milestone and achieved 14.9 percent YoY growth for FY’22

  3. Total headcount reached 208,877 with net addition of 39,900 during the year, up by 23.6 percent YoY

SBI’s optimism

India is likely to be the beneficiary as China slows down in terms of new investment in their economy. Apple’s recent decision to shift part production — of its flagship iPhone 14 model for worldwide shipping — to India captures aspirations and optimism that an upwardly mobile population should open the floodgates for other major conglomerates to follow suit, the report added.