Technology is changing India’s investment landscape

India has long been recognised as a major service provider for global companies,yet at the same time it has historically been considered a high-risk location for foreign investment, something that has hampered the development of self-sufficient Indian start-ups. Now, however, with India starting to develop a reputation as a centre for technological innovation in the digital age, investors are showing a greater level of confidence in the nation’s entrepreneurs.

Shifting focus

India has been a key source of cost-effective support services to major companies around the world since the era of globalisation began. It has similarly been a recognised provider of software solutions for over 30 years. India’s outsourcing industry was recently valued at $150bn, and it has been a major provider of employment, contributing significantly towards GDP and also driving the move towards greater urbanisation.

As more developing nations come online and begin to establish their places in the global market, the outsourcing industry has become increasingly competitive and pressurised. Large nations such as the US have also been floating protectionist policies that will encourage domestic firms to create jobs within their home countries rather than outsourcing abroad. For those reasons, many of India’s tech providers are shifting focus away from attracting overseas contract and more towards research and innovation at home.

Investor confidence

India’s increasingly strong technology sector is attracting great interest from the world investment community, which has historically been cautious about investing in Indian companies. Domestic investment has also increased, as India’s reputation as a hub for technological innovation solidifies. India’s 560m internet users includes many keen to enter the investment market. As well as buying shares in companies at home and abroad they are trading currencies using online forex brokerage.

With the number of smartphone users in India having increased by 364m since 2014, to 450m, connectivity, investment opportunities and technological innovation go hand in hand in one of the most connected nations on the planet- second only to China.

Technological capital

India is now the world’s third biggest nation in terms of investment in technology deals and the government’s Digital India project has done much to speed and facilitate the rate of digital transformation. Bangalore has established itself as the nation’s technological capital and is positioned to be the next big tech hub worldwide. Hyderabad and Gurgaon are also attracting global tech giants such as Google to set up branches in their cities, as technology has an increasingly positive impact on Indian life.

The way forward

There are still issues that need to be addressed if India is to realise its potential future as a global technology hub. The major problem is that despite government investment in training and education there is still a worrying skills gap. Moreover, those young people who do have the right skills plus the necessary personal qualities to succeed often leave India to seek opportunities elsewhere.

Both the public and private sectors need to offer greater incentives for talented young people to remain in India and work in its tech sector, as well as providing them with the necessary skills for the digital economy. In order to attract outside investment, India must invest in itself first.

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