The Union Budget for the fiscal year 2024-25 has set a robust framework for the growth of technology-driven industries, particularly in the Business Process Management (BPM) and Information Technology Enabled Services (ITES) sectors. I believe that the 2025 budget aligns with the government’s vision for Viksit Bharat 2047, particularly highlighting the IT sector’s potential to be a significant contributor to this initiative. The government’s strong focus on digital transformation across diverse sectors aligns seamlessly with the core strengths and vision of the BPM industry. One of the most notable aspects of the previous budget was the significant allocation for education and skill development, which includes the ambitious upgrade of 1,000 industrial training institutes. This strategic investment in human capital was particularly vital for knowledge-intensive sectors like IT-BPM, as it prepares the youth for the complexities of modern technological demands.
The Current Landscape of India’s IT-BPM Sector
As of the end of FY 2023-2024, India’s IT-BPM industry, excluding e-commerce, has reached an impressive valuation of INR 20.3 lakh crores, reflecting a remarkable achievement in the technology sector. With India as the third-largest and fastest-growing hub for technology startups, the IT-BPM sector has contributed approximately 7.5% to the national GDP.
As India prepares for Budget 2025, I urge the government to provide robust support to propel India’s promising IT (Information Technology) and ITES (Information Technology Enabled Services) sectors, which have shown tremendous growth potential amidst rising unemployment challenges. In a landmark achievement, the IT services industry has surpassed over $ 200 billion in revenue this fiscal year, according to a report from NASSCOM. This milestone highlights the sector’s substantial growth while reinforcing its status as the largest private-sector employer in India, providing 5 million direct jobs—including a record 450,000 in 2023 alone. The sector has also embraced diversity and inclusion with over 1.8 million women employed, adding 200,000 female employees in FY22. Not only this but the sector’s impressive 15.5 per cent growth, the highest since 2011, was driven by the rapid adoption of the latest technology and a significant shift to cloud services post-pandemic.
Anticipations for Budget 2025
Despite numerous efforts and initiatives for skilling and employment, the unemployment rate for Indian youth aged 15 to 29 stood at 10.2% for the 2023-24 period, according to government data. The need for strategic government initiatives in the upcoming Budget 2025, can ignite a more promising future in the IT and ITES sector, ultimately creating new job opportunities.
The budget for fiscal year 2025-26 is anticipated to be presented on February 1, 2025. This will mark Union Finance Minister Nirmala Sitharaman’s eighth consecutive budget presentation. As we approach the upcoming budget, there should be an emphasis on the need for tax incentives and subsidies for research and development. The tech industry expects a significant transformation that could set new benchmarks for innovation and growth. Anticipations are high for increased allocations towards digital infrastructure, artificial intelligence and cybersecurity, aiming to bolster India’s position as a global tech hub. Demands are also there for incentives to spur investments in startups and emerging technologies, strengthening the vision of a digitally empowered era.
Enhanced Focus on the IT Sector
Establishment of Centers of Excellence for Digital Literacy: Dedicated investment in creating dedicated centres of excellence for digital literacy can generate skilled and industry-ready youth. This initiative will ensure that the youth are effectively navigating and contributing to the digital economy.
Increased Investment in AI Research and Development: Funds will be allocated to expand research and development initiatives, especially those targeting artificial intelligence, machine learning, and cybersecurity. The growth potential in this area is significant, and supporting AI innovation can enhance our technology development ecosystem.
Support for IT and ITES Sectors: Provide targeted financial incentives and resources to boost both the IT and IT-enabled services (ITES) sectors. This support will foster innovation, create jobs, and promote sustainable growth within the industry.
Path to a USD 5 Trillion Economy
Budget 2025 should focus on investments in key areas such as AI/ML, Data Analytics, 5G, Telemedicine, and cybersecurity within the BPM sector, enhancing India’s global competitiveness. Moreover, the government should also invest in supportive measures for startups and SMEs in this sector to drive entrepreneurship and generate employment.
To reach the ambitious goal of becoming a USD 5 trillion economy, the government must prioritise specific sectors that play a vital role in fostering a vibrant IT and ITES industry. By investing in infrastructure, fostering innovation, and nurturing a skilled workforce, these efforts can significantly propel economic growth. This approach will not only enhance the local technology landscape. Still, it will also position the country as a frontrunner in global technological advancements, driving further investment and development in the sector.
(The author is the Founder and President of Vertex Global Services and Trade Commissioner for the India-Africa Trade Council)
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