The Internet Services Sector in India is currently valued at $33.8 billion and by the year 2022, it is expected to reach $76.4 billion in conservative estimates, according to a report titled “Economic Impact of Internet Services in India”, published by the Internet and Mobile Association of India (IAMAI). However, the sector has the potential to reach a value of $124 billion by 2022 if certain recommendation made in the study fructify.
By the year 2022, India is expected to become a country of 1.4 billion people. With the proliferation of affordable internet connectivity, the number of internet users in the country is projected to increase 1.6x times from 481 million to reach 762 million in 2022. Along with increased availability of internet connectivity, the number of smartphone users in India too is estimated to grow at 1.75x times to reach 526 million in 2022. On the technology and business side of the Internet Services, internet will fundamentally change the way the needs, aspirations and demands of the consumers will be addressed. Pivoting on that, the Internet Services sector is expected to witness plethora of changes in the future.
The report suggests that the sector can reach its potential $124 billion if certain critical factors are realized; such as forward looking and supportive government policies, better infrastructure for widespread internet connectivity, developed distribution network enabling better reach and connectivity to customers in Tier II/III cities for e-commerce, adoption of digital and advanced technologies across the ecosystem and offline sectors etc.
The report covers some of the identifiable internet services that have gained critical mass in the Indian economy such as e-tail, OTAs, Online Classified, Digital Advertising, Edu-tech, Food-tech, health-tech, Digital Entertainment (including online gaming), Fintech and Digital payments. Digital payments as a sector has been mapped but not included in the total estimate given the challenge of double counting, as it serves as a facilitator for many of the other services.
IAMAI stated that the numbers projected in the report are conservative estimates as several sectors like Agritech have not been included in the study because these sectors are yet to gain any critical mass that could be used as benchmark for future projections. Similarly, new technologies like IoT, AI, M2M that are expected to shape the future of internet services too have been kept outside the ambit of this study because the real impact of these sectors are difficult to determine at present. The association stated the in the coming days the internet service sector may witness sea-changes that can well inflate the overall numbers substantially.
The report also attempts to map the socio-economic impact of digital services in terms of livelihood generation and positive linkages it generates. The study concludes that employment generation from the proliferation of Internet services will be at three levels; with the primary level referring to direct employment generation in fields of Product Design and Development, Sales and marketing teams, Seller and Customer Management, operations such as warehousing, vendor logistics management. Secondary employment generation will occur in the forms of self-employment generation for sellers, cab drivers, utility service providers, content creators etc who will be able to avail livelihood via the online platforms.
The third or tertiary level of employment generation will be by allied industries in the ecosystem providing on-ground field support to the internet service providers like third party warehouse and logistics handlers, delivery staff (first mile and last mile connectivity), affiliate marketers, bloggers social influencers, business associates for lead generation and order logging, packaging services, etc. The internet sector is estimated to employ around 10 lakh employees presently and is estimated to create 12 million net jobs by 2022.
IAMAI stated that in course of the study the association tried to recognize the digitization of conventional sectors being enabled by the internet services that can have long run positive consequences for the Indian economy. There are currently around 51 million SMEs in India, which contribute approximately 37% of the manufacturing output, 46% of exports and employ 117 million people. It has been observed that digitally enabled SMEs generate 2x revenues as compared to offline SMEs, attributed to the access to a wider base of customers, newer geographies/markets, additional sales channel etc.
However, presently only 2% of these SMEs are digitally enabled. There is a conscious effort by government agencies and internet businesses to digitize SMEs, and this trend is expected to generate immense benefits. With advances in digitizing existing offline businesses, promotion of industry 4.0, digital on boarding of micro-entrepreneurs, etc the impact of the internet services can potentially be greater with newer service categories emerging in the near future.If you have an interesting story to share, please send it to [email protected]