Global companies pick India for their digital services, says Nasscom

India continues to be the preferred destination for global businesses aiming to build and expand their digital services portfolio, according to a recent study by industry body Nasscom-Avasant.

Over 50 per cent companies in the travel and transportation, telecom, media and entertainment, and construction and engineering sectors said they would choose India for outsourcing their digital services’ needs, it said.

The report, ‘Digital Enterprise Maturity 5.0: Digital Readiness in the Era of AI’, also highlighted nearshoring trends, where around 45 per cent of high-tech, travel and transportation companies, along with 41 to 43 per cent of telecom, discrete manufacturing, and construction firms, opted to nearshore to India in 2023.

Nearshoring is a business practice that involves outsourcing tasks to neighbouring or nearby countries rather than distant offshore locations.

The report also pointed towards interesting trends in investments in digital services by global firms.

According to the report, around 90 per cent of global companies had plans to boost investments in key digital technology areas in 2024, including artificial intelligence (AI) and machine learning (ML), big data analytics, cloud computing, cyber security, and intelligent automation.

Further, around 71 per cent enterprises spent over 20 per cent of their tech spends on digital solutions in the calendar year 2023.

“A strategic framework is required for businesses seeking to hasten digital adoption in an era where artificial intelligence and skills are paramount. Prioritising the development of digital talent within organisations is essential to ensure the workforce can effectively leverage AI and other advanced technologies,” said Sangeeta Gupta, Sr. Vice President and Chief Strategy Officer, Nasscom.

While the adoption of GenAI is set to expand significantly in 2024, the focus of the industry is anticipated to shift more towards cybersecurity by the first half of 2025, said the report.

The analysis is based on a survey of 550 enterprises across 11 major sectors and seven geographic regions. It said that around 68 per cent of global firms were anticipating an uptick in client demand, while 80 per cent expected revenues to either maintain current levels or increase, even amid pricing pressures, in 2024. 

Sectors, including energy and utilities, high-tech, retail, and telecom, media, and entertainment, witnessed significant digital spending allocations since 2022, according to the report.

The study also indicated a rise in the number of firms having dedicated digital workforce.

In 2023, 83 per cent of enterprises reported that over 6 percent of their total workforce was dedicated to digital roles, a notable increase from 66 per cent organisations in 2022.

“This surge in digital talent emphasis was propelled by the advancements in Generative AI, which, in turn, sparked a heightened focus on cloud computing and data-related skills,” said the report.

Key findings

More than 50% companies in various sectors said they would choose India for outsourcing digital services needs

Around 41-43% of telecom, discrete manufacturing, and construction firms, opted to nearshore to India in 2023

90% of global firms had plans to boost investments in digital tech areas in 2024