The Big Data and Analytics industry has gone through major disruptions in the last five years. In our annual study — Analytics & Data Science Industry in India 2019 with Praxis Business School, we summarise where the domestic analytics market is heading and the state of analytics outsourcing in India.
We have seen a marked shift in which Analytics and Data Science has moved beyond supporting new business models and operational effectiveness to shaping business performance. What was once a competitive edge — advanced analytics is no longer limited to a few leading companies or data-intensive industries. There is also a concerted shift in IT spending with the amount of spending related to analytics and BI going up significantly.
In our 2018 report, we estimated the Analytics, Data Science and Big Data industry in India to be $2.71 billion annually in revenues. In 2019, the analytics industry has grown to $3.03 billion in size and is expected to double by 2025.
Here are a few of our observations — enterprises across the board are building up their analytics capabilities and analytics has become the biggest revenue driver for Indian IT bellwethers, captives and domestic firms within their digital portfolio. Also, the shift towards intelligent automation, AI and machine learning, is changing the face of data and analytics services. However, despite the momentum in the market, there is an overall dip in the growth rate from a year ago. The domestic analytics industry has grown by 12% this year.
Overall, the analytics industry currently accounts for almost 21% of the whole IT/ITeS industry in India. The analytics ecosystem in India is led by Domestic IT/ITes firms that are leading players in the analytics outsourcing market. The outsourcing industry is led by Indian IT bellwethers like TCS, Wipro, Genpact, Tech Mahindra, HCL Infosystems among others that form 35% of the analytics outsourcing market.
The report is designed to capture the cumulative size of the analytics market in India, outsourcing market in India and domestic analytics industry in India, the size and growth of analytics and data science market by segment and sector, outsourcing market in India and areas where we can expect to see the maximum growth. It is intended for technology leaders, management consultants, Business Unit heads tasked with building data science units within their company. The report is geared towards IT decision makers and business leaders to understand the developments within data and analytics domain and understand market opportunities, the key drivers, challenges the dynamics at play in this space.
Demystifying The Analytics Market
- The cumulative analytics market in India stands at $30 Billion
- Outsourcing is the main driver of revenue for Indian vendors accounting for $27 billion in revenue
- The domestic analytics market stands at $3.03 billion in size and is expected to double by 2025
Analytics Outsourcing Industry
Indian IT bellwethers are the leading revenue generators in the analytics market, with TCS clocking nearly $2 billion from analytics services. As companies expand their digital portfolio, India Inc. led by TCS, Genpact, Wipro are investing heavily around data and analytics, increasing the range of services and also the scope of projects to corner a bigger chunk of share. The outsourcing industry in India for Data analytics services and products is almost $27 billion. These include combined numbers from exports as well as captives and back offices for all analytics related services and product sales:
- Analytics industry currently accounts for almost 21% of the whole IT/ITeS industry in India
- Tata Consultancy Services gets nearly $2 Billion in revenue a year from analytics, making it the largest chunk of its digital revenue
- Over the years, a lot of existing services have been clubbed into analytics, including reporting, data warehousing etc.
- Domestic IT/ITes firms are the biggest players in the analytics outsourcing market. They include large players like TCS, Wipro, Genpact, Tech Mahindra etc. They form almost 35% of the analytics outsourcing market.
- MNC IT providers come at a very close second at 32%. They include organizations like Accenture, Cognizant, IBM etc.
- Captives form 12% of the analytics back-office market whereas boutiques analytics firm, though large in numbers, form just 11%
- Consulting firms account for 10% of the analytics market and include firms like McKinsey, Deloitte etc.
- In terms of geographies served, almost 47% of analytics revenues in India come from exports to the USA
- UK comes a distant second at 9.6% of revenues
Domestic Analytics Industry
While growth in Data Science industry remains strong, the growth rate for domestic analytics industry has plateaued over the last one year.
- The overall Data Analytics industry in India is currently estimated to be $3.03 Billion annually in size
This is the overall consumption of analytics within Indian organizations while the outsourcing market is projected to be bigger
- The analytics industry is expected to double in size by 2025
Sector Type for Analytics Industry
The analytics adoption is led by India’s BFSI sector which has also broadened its portfolio by piloting several key AI and ML-related initiatives. After finance and banking, marketing and advertising sector is the second biggest adopter of analytics.
- In terms of Sector type, Finance & Banking continues to be the largest sector being served by analytics in India. Overall, 36% of the analytics market size in India comes from Finance & Banking
- Marketing & advertising comes second at 25%, followed by the E-commerce sector at 15% of analytics revenues in India
Analytics Industry By Cities
Bengaluru is the biggest hub for analytics with leading MNCs and captives setting up analytics CoEs in the city. This year, Bengaluru has bested Delhi NCR by capturing the largest analytics market. This is also reflected in funding with Bengaluru startups boasting of the biggest war chest.
- Bengaluru has clearly emerged as the biggest centre for analytics in India with almost 28% of all analytics market being captured by the city
- Till last year, Delhi NCR was the largest area for analytics market size; this year it has slipped to the second position at 25% of India’s analytics market
- Mumbai comes a distant third at 18%
- Pune, Hyderabad & Chennai have similar size at almost 9%
Analytics Professionals In India
Upskilling has emerged as one of the key corporate trends within leading IT companies. This has resulted in a strong demand for analytics training and data literacy across functions. In fact, this trend is also reflected at the senior leadership level with hands-on courses that impart specialised training.Work Experience
- The average work experience of analytics professionals in India is 8 years; slightly up from 7.9 years from last year
- Around 22,000 freshers were added to analytics workforce in India this year; up from 16,000 freshers last year. Hiring for freshers has increased by 37%
- Almost 40% of analytics professionals in India have work experience less than 5 years, the same as last year
When it comes to distribution by company type, the largest number of analytics employees are absorbed by large IT firms followed by mid-size organisations. This will continue to reflect in hiring trends with captives having the maximum requirement for analytics talent.
- Almost 38% of analytics professionals in India are employed with large-sized companies – with more than 10K total employee base
- Mid-size organisations (total employee base in the range of 200-10K) employ 33% of all analytics professionals in India
- Startups (less than 200 employee base) employees 29% of analytics professionals in India
While the data and analytics market will continue to grow in India, there will also be an emergence of industry-specific analytics use cases. Today, advanced analytics is at the core of future platforms, solutions and applications. While it has become pervasive, data and analytics are now increasingly augmented by AI/ML with analytical models being auto-generated models. Across the analytics stack, tools are becoming more user-friendly and we are seeing an increased role of machine learning and AI in automating aspects of data science and ML models for development and deployment.
Increasingly, companies and captives are growing their business beyond analytics and broadening their portfolio with verticalized AI-based solutions. Today, IT firms and even boutique analytics firms are building an ML practice and developing vertical-specific AI solutions. The product and service suite is increasingly reflecting an AI-shift and companies that haven’t yet embraced this next wave of disruption will definitely re-orient their practice around it.