India's spend on IT is expected to grow to over $50 billion in the next five years from the current $29 billion and this would be propelled by the country's start-up eco-system and growth of MNC R&D centres.
According to a study by globalisation advisory firm Zinnov Management Consulting, of the 2020 start-ups the country has seen till date, 75 per cent come from digital, and business and productivity spaces and 64 per cent under marketplace and mobile domains.
“The funding eco-system in the country has changed over the last six months, and there is an increase in investors showing interest in funding digital start-ups in the country,” said Mr Karthik Ananth, Director-Market Expansion, Zinnov Management Consulting, at the release of the study report.
Over 150 start-ups are expected to be established in the country this year and the number of Indian companies in the current Forbes 2000 list (57 companies now) is expected to triple over the next five years, he said.
Venture capitalists such as IDG Ventures, Canaan Partners and Helion Ventures fund ideas in the technology/digital field and majors like Schneider Electric, Cisco and SAP are keen to acquire start-ups, indicating the scope of growth for start-ups, he said.
Engagement Models
The potential for this growth lies in “co-creation between MNCs and start-ups,” says the study. It describes the “engagement model” technology firms follow to run India-focussed venture firms and set up “incubation teams”: a VC model where companies select ideas and help entrepreneurs execute them. Such models are becoming popular, says the report.
Mr Ananth also said entrepreneurs such as Mr Azim Premji and Mr Narayana Murthy turning venture capitalists, and in turn becoming second generation entrepreneurs, are creating a unique eco-system that will spur the start-ups and innovation industry in the country.
Start-ups, although strong on innovation, face issues such as diversity in the Indian market, and the strong governmental regulations, says the report.