Recent disruptions in the telecom space have given a strong impetus to digital adoption in India, accelerating the rate by at least a few years. India’s Internet economy is expected to grow from $100-130 billion (about 5% of GDP) to $215-265 billion (7.5%) by 2020. E-commerce and financial services have been projected to lead this growth as has been stated in a report titled ‘The $250 Billion Digital Volcano: Dormant No More’ by BCG-TiE. This can be a moment of optimism for tech startups, investors and other internet entrepreneurs who are currently encountering funding crisis and closures in the highly bloodthirsty startup eco-system.
Whilst the Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy, the Indus Entrepreneurs (TiE) is a global organization fostering entrepreneurship through mentoring, networking and education.
The 3 forces at work!
Driven by strong addition in online users and explosive growth in data consumption, India is already the 2nd highest country in terms of mobile Internet users with 391 million+ users. This is only set to swell rapidly to about 650 million mobile Internet users by 2020. 4G enabled devices, reliable high speed data and proliferation of digital content are the three forces that are synergizing to unlock Internet consumption in India.
Here’s how much each sector will encompass:
- E-commerce and financial services – $40-50 billion
- E-commerce products – $45-50 billion
- Digital media and advertising – $5-8 billion
A major chunk of this is expected to come from private and government infrastructure spending ($50-60 billion), followed by that on connectivity ($45-55 billion) and devices ($30-40 billion). At the same time, data consumption by 2020 could potentially increase 10-14 times, projected to reach 7-10 GB per user per month.
Massive Digital Adoption
The report has mentioned that by 2020, 4G enabled devices are expected to grow 6 times to 550 Million devices which will constitute 70% devices in use. Added to this, reliable high-speed data is becoming both ubiquitous as well as mass affordable. Increased high speed Internet adoption is also expected to increase time spent online to almost 3-4 times by 2020. Furthermore, the amount of video consumed online is on the rise especially driven by online media and entertainment.
Digital economy will have a much broader influence beyond the direct economic impact. Digital adoption will deliver several citizen-centric social benefits like enhancing ease of doing business, improving access to services and products and transforming governance.
As the new digital paradigm emerges, adapting to change will become critical. For instance, the impact on jobs is expected to be transformational. Increased automation will minimize manual and repetitive roles while roles in upcoming spaces become coveted, e.g. human-machine interaction.
Existing roles will also undergo transformation as low-value adding tasks get automated. New ways of working are expected to emerge with an increasingly flexible workforce optimizing for efficiency. At the same time, genesis of new technology-led business models will give impetus to entrepreneurial activity and create new opportunities.
As Internet access ceases to be a constraint, consumers will become more quality conscious, resulting in an increase in the average video resolution. Driven by these changes in online consumption, average data consumption per user is set to increase by 10-14 times by 2020.
The conversation has now moved from ‘Internet of Things’ to ‘Internet of Everything’ and digitization is presenting great opportunities for multiple stakeholders.
Image sources: TiE-BCG’s The $250 Billion Digital Volcano Report