The Indian Analytics domain has undergone significant development over the last year, and more so ever since AIM began researching and studying the domain 6 years ago. In the latest edition of the Indian analytics study, AIM Research, in association with AnalytixLabs, provides insights on the overall analytics domain and the state of analytics across sectors and enterprises. AnalytixLabs pioneers in AI & Data Science training and is widely acclaimed for high-quality training by industry experts.
The report, now in its sixth year, analyzes the direction in which the analytics market is headed.
The analytics capability is no longer restricted to the MNC and Domestic IT companies and captive units of Banking firms. The broader Data Science domain has transformed beyond just supporting business functions Analytics has now emerged as a necessary capability across organizations, with organizations developing Data Science capabilities that transcend the entire business model and operation value chain of the firms. Analytics is no longer the purview of marketing, IT, and data rich firms. Firms across sectors and types, including Industrial and FMCG companies, are increasingly adopting analytics and investing both capital and operational resources in the Data Science domain in order to gain a competitive edge in the market.
Finally, analytics is enabling numerous predictive and prescriptive capabilities across organizations – these include recommendation and predictive modeling driven by Artificial Intelligence (AI) and Machine Learning (ML).
As covered in our reports regarding the development of the data science domain in India, it is evident that the broad data science domain and specifically the analytics function has experienced significant growth over the last year itself. The growth in salaries across almost all parameters, the maturing of the analytics market in terms of experienced hiring and salaries offered, the significance of gender diversity in the Indian analytics function, and the $762 Mn investment in Indian AI and analytics start-ups, are self-explanatory in terms of the development and global standing of the Indian Analytics market.
This development has facilitated the increase in overall revenues of the Indian analytics function to $35.9 Bn. This signifies a growth of 19.5% in revenue year on year – last year the analytics function garnered $30 Bn in revenue.
The analytics function experienced growth across almost all companies, industry types, services rendered, and geographies.
Key Highlights 2019-2020
- As of March 2020, the analytics function in India earned consolidated revenues of $35.9 Bn – a 19.5% growth in revenue over last year.
- The revenues are reported for data across industries, company types, services, and segments.
- Analytics services cover descriptive, predictive, and prescriptive analytics, and include data reporting, business intelligence, visualization, and analysis.
- The analytics domain accounted for 19% of the total revenues of the Indian IT and ITES market. This proportion has fallen from the 21% share last year. This fall is due to the Digital services segment experiencing very significant revenue growth of approximately 25% y-o-y across the IT / ITES sector – the share of revenues from the digital domain has significantly increased across IT enterprises. The share of analytics will increase and rise to about 30% of the IT industry by 2025. By then, the revenues of the Indian IT & ITES industry would be significantly driven by Digital and Analytics services.
- TCS continues to lead the revenues across all enterprises (IT and otherwise) for both MNC and Domestic types, with $2.5 Bn in analytics revenue, up 25% from $2.0 Bn last year.
- The Banking, Financial Services, and Insurance or BFSI sector contributed approximately 10.7% of the total revenue share – the total revenues include the revenues of IT firms. Excluding the revenues of IT firms, the enterprises across the BFSI sector contributed 35.6% of revenues – the maximum revenue contribution.
- Bengaluru yet again led the way for the largest share of revenues (city-wise) at 29.4%.
- 16% of the analytics revenues across all enterprises are attributed to advanced analytics, predictive modeling, and data science, up from 11% in 2018 – this highlights the growing maturity and progression of the Indian Data Science domain.
Section 1: Sector-wise Distribution
This section covers the findings of the sector-wise contribution in the revenues of the analytics industry. The IT sector remains the top contributor to the revenues of the analytics function (Domestic and Outsourced cumulative), providing 67.4% of all the revenues combined. While the IT sector was the largest contributor last year, there are no comparable figures as the numbers last year were segregated on the basis of Outsourcing and Domestic revenues. This year, as a proportion of the overall revenues, the Domestic IT companies have the highest share of revenue of 35.7% – these companies include Infosys, HCL Tech, Tech Mahindra, Wipro, and TCS – TCS leads the list of analytics revenues for all enterprises at $2.5 Bn. Domestic IT is followed by MNC IT enterprises that have a revenue share of 31.7% – these companies are led by Accenture, Capgemini, Cognizant, and IBM – Accenture is at the very top of the list of MNC IT companies, and comes second across all enterprises, with $2.4 Bn in revenues from analytics services. The enterprises from the BFSI sector contributed 10.7% of the total revenue, highlighting the continued investment in analytics capability, personnel, and technology in this sector. This figure covers the BFSI Domestic and Captive revenues.
Sector-wise Distribution (Excluding IT and Consulting Sectors)
When not considering the IT and consulting sectors’ revenues, the BFSI sector or function contributed 35.6% of the analytics revenues. This is the largest contribution excluding the IT and Consulting sectors. The BFSI sector is followed by Marketing, that contributed 25.8% of the revenues. Both Marketing analytics and advertising analytics have contributed to marketing revenue. While, the Media sector contributes the maximum revenues to Marketing, the Telecom and FMCG sectors are also significant contributors to this function.
Marketing is followed by the ecommerce sector that contributes 14.4% of the revenues. As a comparison on a year-on-year basis, the revenue contribution of BFSI has marginally decreased to 35.6% this year from 36% last year. The revenue contribution of Marketing has risen to 27.7% this year from 25% last year. Revenue contribution of ecommerce has marginally decreased from 15% to 14.4%. This marginal increase or decrease across these 3 sectors or functions is largely due to each of these sectors adopting analytics at an early stage of operations set-up.
Enterprises across these sectors are now leveraging these legacy systems to create value for their customers and derive revenue. While there is no major significant investment across these 3 sectors in analytics, 3 major analytics capabilities – descriptive, predictive, and prescriptive are all utilized to identify appropriate products and services for the customers across each of these 3 sectors –
- BFSI sector: Analytics capabilities are utilized to identify customers across income segments, send targeted communications to customers, and identify various financial products across several customer demographics. Moreover, the BFSI sector continues to innovate in niche analytic areas, which include analytics / AI-driven customer support, and ML-driven financial advice.
- Marketing: Owing to the growth of digital capabilities and digital marketing across several sectors including Media, FMCG, and Telecom marketing analytics is increasingly leveraged for targeted advertising and communications.
- Ecommerce: Because of greater competition for customer acquisition and services across the e-commerce sector, analytics is increasingly adopted to create customer value.
The Pharma sector, which includes the Domestic and MNC captive pharma companies, contributed $ 0.9 Bn in terms of revenues. While this corresponds to an 8.5% share for all companies (excluding IT and Consulting), the growth that this sector has experienced in this domain is indicative of Domestic and MNC Captive pharma companies leveraging advanced analytics, including Artificial Intelligence (AI), in their core operations of drug discovery.
Section 2: City-wise Distribution
Bengaluru continues to lead as the center of analytics – enterprises in this city derived 29.4% of the revenues, up from 28% last year. Bengaluru’s reign as the analytics hub for MNC and Domestic IT enterprises continues this year. Moreover, the city has emerged as the hub of start-ups after the significant investment made in 2019 in start-up ventures. Bengaluru is followed by Delhi that hosted enterprises contributing 25.3% of the revenue share this year as against 25% last year.
As it was last year, so this year Mumbai is in third place this year with 17.6% of the contribution, as against 18% last year. Nonetheless, the sector-location niche of Mumbai continues to remain as many of the analytics functions of the BFSI captives, Investment Banks, Domestic consumer firms, and Consulting enterprises are based in this city. Hyderabad and Pune contribute 10.2% of the analytics revenues, while Chennai falls to the last position in terms of revenues at 7.2%.
Section 3: Global Geography-wise Revenue Distribution
While outsourced analytics revenues were not reported by many MNC and Domestic IT firms, the revenue share by geography was determined through other secondary research sources, including whitepapers and case studies. Moreover, these figures are expressed as a proportion and not in absolute dollar terms. The revenue share of analytics services by geography indicates services to the USA garnered 56.6% of the revenue share, up from 47% last year. The revenues from UK focused services garnered 9.7% share – almost identical to last year when they were 9.6%. Revenues from Australia comes in third at 7.1% of the revenue share.
Section 4: Company Size and Employee Distribution
The distribution of employees by the percentage or number of companies in a given employee size bracket indicates a concentration of personnel across 2 main categories – the startup or niche analytics category (1-200 employees) and the large-scale enterprise category (10000+ employees). A greater percentage of employees are joining enterprises that provide stand-alone analytics-as-a-service to their clients. This includes Indian startups and enterprises that are approaching unicorn status (unicorns – privately held startup enterprises that are valued more than $1 Bn). 30% of the employee are working for enterprises with 1-200 personnel, rising from 29% last year. The majority of the employees are working for enterprises in the category 10000+ employee category. This figure has risen to 40% this year from 38% last year.
Section 5: Demographics of Analytics Professionals in India
The median work experience of analytics professionals in India has come down significantly from 8 years last year to 7.5 years this year. This was a result of 25,500 freshers added to the analytics industry in 2019-20, as against 22,000 freshers added to the analytics workforce last year. Moreover, almost 41% of analytics professionals in India have work experience less than 5 years, up from 37% last year.
Hence, the median work experience of analytics professionals has fallen to 7.5 years this year. This signifies the greater attraction of the analytics domain to the IT workforce, who are choosing analytics over other IT professions / functions. Nonetheless, this does not imply that experienced people are not joining the analytics workforce from other domains. Experienced professionals with more than 10 years of work experience constitute 23.2% of the analytics workforce, many joining from sector-specific domains including FMCG, Telecom, and Industrials.
Moreover, while the experience data signifies a younger workforce, the salary data signifies a workforce moving up the ladder of capability – analytics roles of greater impact are increasingly offered to Indian professionals – the median salary of analytics professionals is Rs. 14.4 Lakhs.
Moreover, the city-wise median experience data reveals Mumbai has the highest level of median employee experience– this is typical of the sector-location niche. A majority of Domestic Banks, Consulting Firms, MNC Banks and Investment firms’ have their analytics operations based out of Mumbai as these operations serve as a natural extension of the core financial and consulting businesses.
Moreover, many Domestic conglomerates, such as Reliance, Godrej, and the Tata Group have their head offices and analytics centers based in Mumbai as well. Hence, the average experience of analytics employees of Mumbai is automatically pushed to the uppermost level at 8.1 years. The median experience of Bengaluru is placed 2nd at 7.5 years. Numerous niche Analytics firms, start-ups, and MNC & Domestic IT firms have their operations centers in Bengaluru.
This has resulted in personnel with considerable experience managing the analytics functions for global and local clients – and has pushed the average experience of Bengaluru to the 2nd spot.
Women in Analytics
The participation of women in Analytics at 27.8%, which is higher than the participation recorded last year at 26%. This is the highest the participation proportion has been recorded ever since AIM began researching the domain.
Nonetheless, there is significant room for growth and improvement. Women Analytics employees are still new in the workforce in India, with a median age of 5.8 years compared to 7.4 years for the entire Analytics workforce in India.
Similarly, the median salaries for women in Analytics is 26% lower than the entire Analytics pool, 10.7 Lakhs v/s 14.4 Lakhs. Here, the bias of lower salaries offered to women employees for a given set of experience and skill set needs to be addressed by the Labour Department at Centre and State levels and industry organizations including NASSCOM and FICCI.
The professionals in the Analytics industry come from diverse educational backgrounds, as defined in the graph. As the pool of professionals has significantly grown over the last 5 years, the diversity of educational backgrounds has also widened. The largest proportion of personnel is Non-MBA postgraduates at 27.3%.
The proportion of professionals from top-tier institutes is 16.2%. These institutes include the nation’s top Universities, IITs, IIMs, and other high-ranking Engineering and MBA institutes, such as BITs and NIT, and FMS, XLRI, XIM, NMIMS, and SPJain respectively. The proportion of PhDs in this field is 1.6%.
Section 6: Market Projections
The Analytics industry is expected to grow at CAGR of 16% till 2025 – the Indian analytics market in 2025 would touch $75 Bn. The Indian IT & ITES market, on the other hand, is expected to grow at 6.1% CAGR – touching $255 Bn in 2025. While analytics currently account for 19% (dropping from 21% last year) of the entire IT industry, the share of the analytics market is expected to increase and would account for 30% of the Indian IT industry by 2025.
Digital services are experiencing tremendous growth across the IT sector – digital currently accounts for approximately 29% of the revenue of the IT & ITES industry and has experienced 25% y-o-y growth in revenues. Nonetheless, this growth in digital is expected to moderate to about 19% CAGR, enabling the contribution of the analytics domain to rise in terms of revenues and investments.
The revenue for the analytics domain increased to $35.9 Bn – this once again indicates the strength of the Indian analytics domain as a whole, and the strength of the talent pool specifically. The demand for analytics services in India on a consolidated basis continued to grow through 2019-20.
Most of the large IT organizations are now offering end-to-end Analytics-as-a-Service within the broader Data Sciences domain. Large and medium-size IT and consulting organizations, such as TCS, HCL Tech, Accenture, and ZS Associates, are now seldom providing stand-alone analytics services to their clients.The analytics function is strengthened by AI/ML – AI and ML are leveraged to automate aspects of data science and ML models for development and deployment.
While outsourcing is the main driver of revenues, the revenues reported are consolidated for both domestic and outsourcing services. Numerous domestic IT and domestic-consumption driven enterprises have reported that there is a significant shift from simple descriptive data analytics to high-end predictive and prescriptive data analytics services sought by client.
Excluding the IT and Consulting sectors, the BFSI sector continues to lead the revenue segment, with 35.6% of the revenue share. The Pharma sector, which includes captive and domestic enterprises has contributed 8.5% of the revenue share, a significant jump over the years – continuing the trend of revenue jumps in the previous years. In terms of cities, Bengaluru emerges as the destination with the highest revenue share – at 29.4%, indicating the appeal of the location in terms of analytics talent and ecosystem.
Finally, given the growth in Digital and Online segments across not just the Indian IT industry but also other sectors, including Media, ecommerce, FMCG, and Telecom to name a few, the Indian analytics markets is expected to grow at 16% CAGR till 2025, accounting for 30% of the revenues of the IT / ITES industry – impacting not just employment but also innovation in business processes through analytics-driven Artificial Intelligence models and Prescriptive Analytics.