Rise of the Internet Economy in India – Trends Shaping Digital India

Digital Transformation is absolutely necessary for businesses that want to remain competitive, but it is also changing the landscape of work as we know it

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The rise of the Internet in the last decade has brought about new business models and market segments that have revolutionized the way in which companies operate today. The nation’s digital economy is poised to undergo explosive growth due to the proliferation of devices, and the Internet economy is predicted to touch the $266 billion mark in 2020, accounting for nearly seven per cent of the country’s GDP. 


The last decade has seen India embracing technology faster than ever with digital solutions making inroads into all walks of life and reaching more and more Indians each year. With the Internet boom, online retail is one sector that is benefitting the most. It will soon emerge as one of the fastest-growing industries in India, which will further compel many retailers to move from a bricks-only model to a bricks-and-clicks model that amalgamates online channels with brick and mortar stores. By the end of this decade, India will also see further development of smart cities as the country has an ambitious plan to upgrade its urban infrastructure - further empowering the digital backbone of the country.

Growth of Digital Adoption in India

Digital adoption is fast engulfing our lives and users are consuming more of it. In the next five to seven years there will be around 600 million Indians with smartphones, each consuming content and transacting digitally. This will create immense opportunities across the lives of those individuals and impact nearly all the industries they interact with, including financial services, retail, media, travel & hospitality and healthcare.

While in the last three years smartphone users in India have quadrupled, mobile Internet users have grown to 391 million, making India the second highest country. However, high-speed Internet users are limited to only 56 per cent. As a result, average data consumption per user continues to be low, standing at less than 1GB data per month, vis-à-vis developing economies like Indonesia and Brazil at 2-3GB per month and developed economies like Japan and US at 9-11GB per month.

What began with early adopters, especially the youth, has now proliferated to their parents and even grandparents. Social networking and messaging have been the biggest application enablers that have been inducing, and most importantly sustaining, adoption. While the growth trajectory is nothing short of phenomenal, mass adoption and innovation at scale is the next critical step in achieving the Digital India ambition.


Key Forces Unlocking Internet Consumption in India

With the device landscape maturing quickly, better and more affordable devices are now inundating the market. At the same time, high-speed Internet has also become widely and reliably available, as well as affordable for the masses. Recent events are driving digital payments, further bolstering the rate of digital adoption across the country. Simultaneously, digital content is also proliferating with more players entering the space and producing superior content and driving consumption.

Changing Landscape

India’s multi-lingual characteristics have also brought about a unique diversity to the “Indian Internet Consumer” who may or may not necessarily speak the dominant languages. This means that organizations today need to focus on content that is both relevant and valuable to multi-linguists for enhanced consumer outreach and attention.

Recent research has indicated that by 2021, the digital transformation will add an estimated $154 billion to India’s GDP and increase the growth rate by 1 per cent annually. Government initiatives like 'Pradhan Mantri Kaushal Vikas Yojna’ and ‘Make in India’ are also expected to fuel employment generation in the country. Manufacturing, IT & BPM/ITES and Finance, Insurance & Real Estate are the major contributors to organized private jobs which rely heavily on online recruitment.

Furthermore, the online recruitment market in India, Middle East and South-East Asia are expected to reach $622 million in 2019, as compared to $294 million in 2016, at a CAGR of 7.3 per cent. This growth is led by expanding digitization across regions and a demographic shift towards a younger population. The overall growth in the digital landscape, together with a large working-age population of over 90 crores, presents a significant growth opportunity for the overall recruitment market, especially the online industry.


Impact of Internet Economy on Technological Change, Skills and Employment:

Digital transformation is poised to change the employment space. However, the full impact is uncertain in terms of the loss of jobs. Increased automation, new ways of working and emerging business models will lead to the simultaneous creation of jobs, destruction of jobs and augmentation of jobs.

India’s digitization has had a positive impact on development and growth, providing new opportunities for skilling, jobs and basic services. For example, digital access to finance improves financial inclusion, and wider access to the internet has enabled a range of other services for consumers, basic services such as healthcare, energy access and water supply, as well as using digital devices to communicate with customers.

With respect to the future of work, digital solutions offer new ways to skill and educate the workforce, new platforms to connect workers to employment opportunities, and new opportunities for decentralising jobs.

In the end, the crux is that Digital Transformation is absolutely necessary for businesses that want to remain competitive, but it is also changing the landscape of work as we know it. New technologies are enabling new capabilities and streamlining work at more advanced levels for businesses, thus changing the relationship s between workplaces and tasks. Digital transformation is all-encompassing and comes with both positives and negatives and the industry should be prepared for that.