STRATEGIST SPEAKS

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TECHNOLOGY
INDUSTRY OUTLOOK
The Economics of Technology
Technology has become the primary disruptive force across the entire global economy, extending beyond being just an industry. As industries
deal with the setback of the COVID-19 pandemic, tech-led strategies will be the key to recovery.
In this report, we delve into the trends and issues in technology industry with focus on India & its journey towards realizing the digital advantage.

Technology – The Value Creator Four Strategies to Win with Technology

Born-Tech firms built businesses around technology even if that Use data and analytics to gain
wasn’t their end product, enabling them to leverage opportunities. Invest in technology talent
an edge
Eg. Netflix, Amazon, Tesla
Traditional businesses have also realised the benefits by adopting a Scale rapidly with asset-light
Add capabilities via partnerships
Tech-led strategy. Eg. Disney launching online streaming, Walmart models
entering e-commerce
Market Value increase for Top 20 gainers in each sector, 2015-2020 Technology Investment Strategy

Technology The average technology budget across sectors as a percentage of

Discretionary Goods revenue is 4.25%. This is expected to grow to 5.11% as
Media sectors adapt to new demand trends.
Born-Tech Firms
Consumer Staples
Tech Led Strategy Average Technology Budget Allocation
Healthcare
Financial Others
58% 27% 15%
Industry Business Business
Incremental Business
Operations Innovation
Change
0 2 4 6
US Dollars (Trillion)

Companies have lately been rethinking their technology investments

52% Market wealth created by 20% Market wealth created by
with agile planning & budgeting, deliberate cloud investments
Born-Tech firms Tech-led strategy and higher capital allocation for innovation.
Source: 1. Bain & Company-Technology Report 2021 2. Deloitte-Maximizing the Impact of Technology Investments
© Management Development Institute, Gurgaon | 2021 - 2022 2
Key Trends in Technology
Circle Size = Momentum 2015-20 Applied AI - Computer Vision, NLP and Speech Technology
Cross-Cutting
Technologies

Next 449K 323K $55Bn

Generation Applied AI
Computing
News Mentions Patents Granted Investments
▪ By 2024, 50% of user interactions will be driven by AI or computer-vision
Process
Virtualization ▪ 1 billion cameras collect and share visual data in 2021
Applicability

Industries
Industry

Multiple

Future of
Connectivity ▪ Computer Vision, Speech, NLP - key trends to transform experiences with AI

Process Virtualization and Automation – Industrial IoT, 3D Printing

Future of 347K 167K $105Bn
Technologies

Nanomaterials Clean Tech

News Mentions Patents Granted Investments
Niche

▪ Advanced simulations and 3-D/4-D printing will be key to virtualizing

▪ Annual industrial robot installation up from 450k in 2015 to 600k in 2022
Fundamental Market-Entry Industry
Research Stage Adoption ▪ By 2030, 10% of manufacturing processes will be replaced by Automation
Technical
Maturity
Future of Connectivity – 5G and IoT

Tech Investment Factors 200K 96K $3Bn

“In the next decade, News Mentions Investments
Patents Granted
we will experience
Scale of Impact more progress than ▪ $1.2T to $2T potential increase in global GDP by 2030 with 5G & IoT
in the past 100 adoption
Technical Maturity years”
▪ By 2030 the goal is to have an 80% penetration of low to mid band 5G
-Peter Diamandis,
Organization Fit Chairman, X Prize ▪ Applications in sectors like remote monitoring and automated transportation

Source: 1. McKinsey & Company-Key Trends in Technology; 2. Bain & Company-Technology Report 2021
© Management Development Institute, Gurgaon | 2021 - 2022 3
Critical Shifts in Technology Industry
Accelerating Digital Transformation Efforts Re-examining manufacturing locations and supply chains

$93.8B $344.3B Growth Opportunities 100% Growth Opportunities

▪ Improve expense model, enhance 10nm semiconductor ▪ Transforming supply chains into digital
4x growth in global XaaS scalability, streamline operations plants located in Taiwan supply networks
market from 2018 to 2024 and South Korea
▪ Maximize subscription value and ▪ Diversifying supplier and manufacturing
customize offering for service providers 20 capabilities to improve adaptability
67% of Amazon’s
Challenges Challenges

Weeks
income is from AWS 15
▪ 70% executives feel security concerns ▪ Managing changing global regulatory
24% CAGR for the slowing down adoption 10
2017 2021
barriers and environmental goals
IaaS and PaaS markets ▪ Inability to understand nuances leading ▪ Geographic availability of talent to
Rising semiconductor
since 2013 to wasted budget spending maintain high performance output
delivery times 2017-2021

Reorienting and Reskilling the Workforce Tech M&A and Anti-trust

30% US workforce to Growth Opportunities 110% Growth Opportunities

work remotely by 2021 ▪ Rapid remote work adoption requiring ▪ Subscription revenues and low churn
Increase in tech M&A deal
end increased investments in technology rates make acquisitions attractive
volume from 2010-2020
Professional
Services ▪ Carbon-neutral policies and ways to ▪ A developed product means increase in
align technology with required policies 550 sales does not lead to increase in costs

$billions
Finance IT
Challenges Challenges
Govt. Trade ▪ Data security and privacy concerns ▪ Potential tech disruptions a key risk
stemming from WFH 50 that could disrupt entire businesses
Education 2010 2021
▪ Increased IT workload with bottlenecks Rising tech M&A deal ▪ Anti-trust bills in the pipeline to create
Remote Work Potential leading to lost productivity hours values 2010-2020 regulatory barriers to Software M&A

Source: 1. Bain & Company-Technology Report 2021; 2. Deloitte-Critical Issues facing Technology; 3. BCG-Decoding the Software M&A Market
© Management Development Institute, Gurgaon | 2021 - 2022 4
Technology Startup Ecosystem
# Start-up funding deals across India (2011 to 2020) Tech start-ups – Past trends

Technology 805 of all investment in 2020 were in EdTech, FinTech and

44%
E-commerce 738
Enterprise, tailwinds provided by COVID-19

Financial 397
CAGR since 2015 for startups in Health Tech, Fin Tech,
Education > 40%
209 Enterprise Tech and Advertisement & Marketing sectors
Media 190

Healthcare 178 New Unicorns added in first 9 months of 2021 alone,

India, the 3rd largest startup 28
taking India’s total number of unicorns to 64
Agriculture 174 market in 2020 at $11.8 billion,
behind only US($143 billion) and
Logistics 132
China($83 billion) Startups using deep tech (AI/ IoT/ Big Data/
2100 +
Retail 126 Blockchain/ XR) to build their solutions

Tech start-ups distributed heterogeneously across sectors Growing use of Deep Tech by start-ups
Enterprise Tech
High Growth sectors % share of start-ups by deep-tech
(CAGR>40%, since 2015) AI/ML 44%
Retail Tech Fin Tech
IOT 22%
Big Data 18%
Blockchain 8%
Health Enterprise
Health Tech Consumer Tech AR/VR 7%

At 41% CAGR, the deep-tech start-up pool is growing faster than the
HR Tech Ed Tech Finance HR overall ecosystem. Start-ups are integrating enabling technologies,
including IoT, Big Data, AI/ML in their operations

Source: 1. Nasscom : digital India: digital public goods platformisation play; 2. MEITY: India’s trillion dollar digital opportunity; 3. Nasscom : India’s tech startup ecosystem
© Management Development Institute, Gurgaon | 2021 - 2022 5
India - Key Destination for AI Innovation
#AI patents filed in India, 2011-2020 AI patents – major growth segments across application areas

2020p 1413 1672

2010-2015
2019p 1295
2016-2020
1347
Consumer Electronics and Healthcare
2018 990
dominate current AI patents file.
2017 575 Emerging segments - Agriculture &
CAGR : 40.7% Software Apps
2016 335

2015 252 CAGR : CAGR:

72.58% 75.18%
632
2014 144 Enterprise demand for AI sustained
2013 125
double-digit expansion in 2020
317 290
2012
5X increased funding in privately 200 199 183
98 165
held Indian AI companies 99 77
44 13 29 10 15
2011 110

Consumer Healthcare Transportation Banking & Agriculture Computer Software E-commerce

Electronics Finance Networks Application
India’s global position

In AI related research Key Takeaways

8th In AI patents filed 4th
paper published
▪ Indian AI market is driving key Research & Development initiatives around
Major assignees AI technologies across sectors, rather than just providing back office services

▪ Many companies have set up AI operations in India, this indicates:

International Domestic - Promising future of AI in India
MNC IT/Tech IT
- Global confidence in AI capabilities of the Indian ecosystem

Source: 1. Report: State of Artificial Intelligence in India – 2020( analyticsindiamag.com); 2 Nasscom - AI patents: driving emergence of India as an ai innovation hub
© Management Development Institute, Gurgaon | 2021 - 2022 6
The IoT Landscape in India
# IoT patents filed in India (2010-2018) # IoT patents - Past trends

2018 1234 Industry 4.0 accounted for 80.4% of the total patents filed
2017 1820
in the IoT domain in India over 2009-19. Major use cases
emerged in the Healthcare and Automobile Sectors :
2016 1119
Healthcare
2015 745
Sensors and Bluetooth LE technology with varied use cases
2014 364
such as remote patient monitoring, physical activity tracking.
2013 176 Reasons for increase in patents:
Automobile
2012 143
- Increased Digitization
- Boom in devices with built in sensors Use of hardware components like controllers, sensors,
2011 120 actuators and connectivity networks for in-vehicle data
- Declining technology costs
2010 102 transmission and connectivity to remote servers.

Growth drivers of IoT in India Top trends expected in IoT domain - India

Data from IoT solutions can be used to Remote monitoring can help ✓ Interconnected manufacturing through Industrial IoT
make better decisions, increasing determine trends & patterns and
efficiency and reducing operational costs report any abnormality ✓ Using the captured data to create IoT based smart cities
Cost Security
Reduction & Safety ✓ Edge computation : Enable devices to perform data
analytics anytime & anywhere in a secure environment
Quality Revenue ✓ Fleet management : vehicle tracking, monitoring,
control growth
analytics, remote diagnostics etc.
By Assessing data from sensors Data from interconnected systems can
or edge devices operators can be used to create customized offering ✓ Optimizing asset and energy management and providing
manage the product’s quality for end user, driving revenue growth better connectivity

Source: 1. Nasscom: IoT- driving the patent growth story in India; 2. Nasscom: State of IoT – The Post Pandemic Resurgence
© Management Development Institute, Gurgaon | 2021 - 2022 7
COVID-19 Led Impact
Indian Technology Outlook for 2021 remains positive with strong revenue growth and hiring outlook

Enhanced Value
Distributed Delivery Reskilling and training Digital Workspace Proposition for
Business Resilience
Capabilities of employees Capabilities the Industry

Sectors most affected by COVID-19 pandemic

Fin Tech Health Tech Cybersecurity

Almost all use cases in FinTech, except Pandemic altered perspective of Healthcare Exposure risk increased with digitization &
lending witnessed increased penetration Industry & led to accelerated digitization forced companies to strengthen data security

Growth in UPI payments Growth witnessed by Revenue growth of Indian

70% 2.2X tele medicine & tele consultation 1.4X
since March 2020 cybersecurity companies from 2019

Lending witnessed early recovery signs, National Health Stack & tools like DEPA are WFH culture driving Edge Security
while impact on asset quality is to play out to unlock affordable personalized care solution demand for distributed workforce

Of investors are using Fin Tech Use of Electronic Health Increase in segment’s share of
35% 1.8X 2X
for equity markets Records by care providers overall funding, compared to 2019

Use cases with rapid growth: Use cases with rapid growth: Use cases with rapid growth:
• Payments • Tele-consultation • Endpoint threat detection
• Wealth Management • Online pharmacy & diagnostics • Data security & privacy
• Insurance • Remote screening & monitoring • Identity Access Management

Source: 1. Nasscom : India’s tech startup ecosystem; 2. NASSCOM IDC Report - Technology Sector In India- Building Capabilities To Win In The New Normal
© Management Development Institute, Gurgaon | 2021 - 2022 8
All the very best!

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