India's digital agenda for 2023 and beyond: Harnessing the power of collaborative innovation

Introduction

Investment in skills development was a key component last year in India's tech scene, and will likely continue to be in 2023. With cloud computing, data science and cybersecurity in high demand in 2022, IT and technology staffing agency NBS Services is expecting double-digit growth in demand this year. In addition to skills development, the Indian government hopes to make mobile phones one of India's top 10 exports, and is taking a colloborative approach to forwarding its digital agenda.

The Take

As India targets the next phase of digital transformation, its government is taking a collaborative approach to technology innovation.
In addition to encouraging a conducive environment for the startup ecosystem, central and state governments are eager to join
industry participants in value creation. Demand in the telecommunications sector is leading the way as 5G becomes a reality.
Nevertheless, telecommunications is not the only sector where change is taking place. The healthcare, agriculture and education
sectors are likely to follow suit, with a new round of funding provided for in the Union Budget (2022-2023).

Context

The competitive landscape for digital technologies and services is changing, with cloud-based offerings growing quickly. Leading mobile operators have also boosted their cloud credibility through a mix of their own IP and strategic partnerships. The financial commitment of cloud hyperscalers and systems integrators has not only helped create an enabling environment for collaborative innovation, but also accelerated growth.

According to 451 Research's Market Monitor projections (which track the potential scale of the cloud-related services market), revenue for cloud, hosting and managed services is estimated to exceed the $6 billion by 2026, with a CAGR of 12% throughout the forecast period of 2021 to 2026.

In its continued pursuit of self-reliance, the Ministry of Electronics and Information Technology has revealed plans to broaden the electronic manufacturing ecosystem beyond mobile phones. Despite a lack of details about the new measures, there will be new production-linked incentive initiatives to increase the country's share in the hearables and wearables segment. The Indian government is also keen to increase its share of servers and IT equipment, driven by industry-wide digital transformation.

In 451 Research's recently published report, we examined India's progress in digitally transforming the country, and the opportunities and challenges this presents for domestic and foreign investors, industry players and the business community at large.

Digital India 2.0: A collaborative culture for digital innovation

India's tech scene in 2021 appeared to be a pivotal movement government digital initiatives, with common service centers being the base and digital access points for two-thirds of the country's population. Meanwhile, the Aadhaar program (digital ID) is changing the way retail activities are conducted in cash-based small towns and villages.

To deliver on his promise of creating a collaborative culture for digital innovation, Prime Minister Narendra Modi is stepping up the government's efforts to strengthen digital empowerment. A new program, Bhashini, is looking to empower citizens by connecting them with digital initiatives in their native languages.

With the Indiastack.global initiative, industry participants are now able to develop digital transformation projects on a "population scale" by tapping the government-owned digital asset repository. By targeting SMBs with limited resources, new initiatives such as GENESIS and PM-Kisan are available to provide direct support for day-to-day operations.

There has been increased focus on developing policies and frameworks that promote the responsible use of innovative technologies, such as government think tank MITI Aayyog's guideline to encourage the responsible adoption of artificial intelligence. New cybersecurity directives from the Indian Computer Emergency Response Team (CERT-IN) in April 2022 expanded the list of reportable incidents to include data breaches, attacks on digital payment systems, and attacks against devices, cloud-related systems and applications. The development of a new data protection act, announced last year, could provide another opportunity for industry participants to collaborate further.

Sector transformation is coming to fruition

Despite the disparities between industry segments in digital readiness and development, sector transformation is slowly but clearly unfolding in several vertical segments of the country. The rise of fintech is an example, as banks and financial services institutions face increasing pressure to rethink the future of banking in the post-pandemic era. And the growth potential of 5G has sparked a wave of strategic partnerships between telecom operators and technology providers.

Taking a platform-centric approach, Bharti Airtel Ltd. forged a strategic partnership with IBM Corp. last year to deploy an edge computing platform based on IBM Cloud Satellite and Red Hat OpenShift. The offering will be available in the 120 edge datacenters of Bharti Airtel, spanning 20 metro centers.

Emboldened by a technology disruption in traditional industries, the Indian government has set aside investment in the Union Budget to modernize and transform strategic industries: agriculture, healthcare and education/edtech. In addition to promoting scientific warehousing infrastructure to increase the shelf life of agricultural products, an agritech infrastructure fund has been created to invest in infrastructure that will make farming more profitable, while also boosting competition.

Meanwhile, the government has refreshed the National Education Mission program, adding new initiatives to accelerate the adoption of digital methods of learning and teaching. In the context of universal health coverage, the government also unveiled initiatives to help build an integrated digital health ecosystem. More private healthcare companies are turning to digital technologies to upskill their healthcare professionals. In partnership with Medvarsity Technologies Ltd. and the Indian Society of Critical Care Medicine, Apollo Hospitals trained more than 160,000 healthcare professionals in ventilator management using a combination of e-learning, live-sessions and simulator-based training.

We think this is an encouraging sign of sector transformation, with smart agriculture and healthtech/medtech no longer being pipe dreams. While still in its early stages, the transformation of the industry has clearly attracted the attention of global technology suppliers and cloud hyperscalers. For example, AWS has partnered with the Indian Farmer Fertilizer Cooperative Ltd. (a network of 36,000 cooperative societies and 55 million farmers) to provide access to an e-commerce platform. Looking ahead, we expect to see more new use cases and success stories as these sectors continue transforming.

Competition: The more, the merrier

In response to the new wave of digital initiatives promulgated by the government, local datacenter and cloud providers have stepped up to seize digital opportunities. Tata Communications Ltd., for example, has enhanced its enterprise focus with the release of the IZO Cloud Platform for Kubernetes Solutions.

Sify Technologies, on the other hand, continues to invest in datacenter capacity. The company already has a datacenter footprint that spans six cities in India with a total data capacity of 84 MW, and the plan is to have a total datacenter capacity of more than 280 MW in four years. Gurugram-based e-logistics startup Quikmile has become part of Bharti Airtel X Labs, which is the telecom operator's innovation facility to "reimagine" the telecommunications market.

Global and regional systems integrators and managed IT providers such as Accenture Plc, Deloitte, DXC Co. and Rackspace Technology Global Inc. are adopting a more collaborative role in the marketplace. Targeting the consumer-packaged goods industry, DXC has partnered with AWS to develop DXC SPARK IoT for CPG. Rackspace Inc., on the other hand, claims over 3,000 cloud-certified professionals, and is pursuing joint sales opportunities with vendor-specific teams and onboarding programs. For example, the company offers access to the AWS MAP funding program via its migration center of excellence.

Generally speaking, global SIs and cloud hyperscalers are willing to put skin in the game, acquiring vertical-specific expertise and investing in cloud infrastructures. Google has pledged to invest up to $1 billion in Airtel as part of the Google for India Digitalization Fund. Both parties will jointly develop "India-specific network domain use cases for 5G and other standards." Meanwhile, AWS recently opened a second cloud region in Hyderabad with three Availability Zones at launch.

All things being equal, a pro-business environment complements a dynamic competitive landscape. To that end, the Empanelment Program for cloud service providers (CSPs) is considered the seal of approval for cloud providers seeking to play a bigger role in the public sector, and it has caught the attention of CSPs, with a growing list of accredited industry participants. Currently, 13 out of 18 accredited cloud providers deliver government community cloud services in addition to public and virtual private clouds.