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India’s technology services industry’s growth can accelerate by 2-4 percent over the next five years, reaching $300-350 billion in annual revenues on the back of a cloud, artificial intelligence AI, cybersecurity, and other emerging technologies, a report by Nasscom said on Wednesday.

The report – whose research and analysis was conducted by McKinsey & Company Knowledge Partners – noted that technology-driven companies are leading the path to a faster recovery globally.

With the consumers’ ever-evolving needs, enterprises are keeping up with continuous innovation, leading to a shifting global marketplace and 10 percent annual growth in the IT services sector, generating high returns for shareholders and investors in the last decade, it added.

Being valued at roughly $1 trillion, the technology services sector is now among the most significant contributors to economic growth worldwide, especially in India the industry now produces about 27 percent of the nation’s exports and provides livelihoods to about 4.4 million people.

“…India’s technology services industry could accelerate growth by 2-4 percent over the next five years, reaching $ 300-350 billion in annual revenues if it can win in the cloud, AI, cybersecurity, and other emerging technologies. This will require closer collaboration among stakeholders across the private sector, academia, and the government,” it said.

Fueling over 50 digital initiatives across sectors like banking and finance, healthcare, governance, etc, the technology services industry continues to be a prime driver of India’s digital dream with a contribution of 8 percent to the overall economy, the report said.

“The Indian Technology services sector can utilise the potential of deep technologies like cloud, AI, ML, IoT, etc, through effective transformational practices, thereby contributing to the overall economy in the coming decade. The government needs to encourage and support digital literacy and skilling to ensure its talent, energy, imagination, knowledge, and unmatched commitment unites to address the customers’ surging needs,” Nasscom President Debjani Ghosh said.

As the competition intensifies, scale and specialisation will be critical to succeed in the next decade of technology services, the report said.

Providers will need to refresh their service lines and offerings and stay relevant to cater to these more digitally adept enterprises, who expect higher-quality services and have very different buying behaviour, it added.

Talent will also be a key differentiator, and the war for acquiring and retaining the next-gen talent will aggravate in the future.