Scope of data analytics in India and future
Introduction of data analytics
In the past decade, India has experienced explosive growth in the data analytics industry due to the rise of internet users. Internet penetration doubled from 20% in 2018 to 41% in 2019, according to World Bank, and is expected to add over 900 million users by 2025. This growth has supported the data analytics industry with a significant increase in the collection of data that can be potentially used to tap into various markets. The data analytics industry already recorded a substantial 26.5% year-on-year growth in 2021, with the market value reaching US$ 45.4 billion.
What is data analytics and its importance?
Data analytics aids companies and government organisations to collect data and identify patterns in the data. This helps to generate better insights for the organisation with regards to decision-making, and sometimes, automates the decision-making process itself. Data analytics can help to transform business and reduce the cost and time to take make quick decisions. The data analytics industry has made a significant impact on Indian companies, especially in their day-to-day operations. Data analytics has enabled the industry to completely automate some aspects of business. Data is considered to be the new oil, and industries and the government are focusing on data analysis to build better products and provide higher quality services. Indian enterprises were estimated to spend US$ 2 billion in FY2021, recording an 11.5% growth in the year.
Benefits of data analytics industry
The data analytics industry offers several benefits and has helped the country and companies to collect data and provide highly efficient products and services. These benefits include:
- Data aggregation and analysis
Data analytics can assist in collection of big data and solve major issues faced by the government. For example, the government has decided to partner with various IT firms to minimise power loss issues. Mr. Alok Kumar, Union Power Secretary, recently said in a statement that India will use smart meters to collect large volumes of data to understand and analyse issues in the power industry to come up with actionable policies. For each problem faced in the power sector, the government is planning to collaborate with various technology service providers and start-ups.
- Discovering potential of untapped markets
India has numerous large untapped markets that can be identified, analysed, and tapped into through data analytics. For example, BharatPe, India’s fintech company, had identified an opportunity among small and medium-sized enterprises (SMEs). Using data analytics and artificial intelligence (AI), the company was able to finance these SMEs by estimating their creditworthiness and disbursed loans worth Rs. 3,000 crore (US$ 400.34 million) with a 96% repayment rate. It aims to disburse loans worth Rs. 14,000 crore (US$ 1.86 billion) by March 2023.
- Efficient allocation of resources
Data collection and data analytics can help a government, company or even an individual to allocate its resources efficiently. Many companies have used data analytics for resource allocation and monitoring. The government has already been using data analytics to facilitate resource efficiency, and a number of private companies (e.g., Zoho, Greythr) have been leveraging performance management tools that analyse employee data.
- Increased efficiency
Data analytics helps companies boost efficiency. For example, the government had developed the CoWin platform for efficient allocation of vaccines in various vaccination centres, which prevented crowding at these centres during the pandemic.
Major sectors in data analytics
The data analytics industry is highly beneficial for economic growth and is used in various sectors. Analytics India Magazine reported that India’s non-IT sectors have seen a huge potential for engineers for data analytics. The newfound approach of using data analytics and AI has led to the development of innovative solutions for different problems in various non-IT sectors. This has resulted in the launch of new business models for companies, thus changing lives, and has provided better prospect for businesses. Major sectors under data analytics include:
- IT Sector:
The IT sector has a major share in the data analytics industry, accounting for 43% of the market in 2021. IT giants in India include Tata Consultancy Services, Accenture, Infosys, Cognizant, Wipro, and Capgemini. Tech demand from this sector is expected to rise with gross employee addition of 450,000 in the second half of FY22. India has also observed significant innovation in several industries through the sector. The government has decided to partner with the IT sector to address power loss issues.
- Banking, Financial Services and Insurance (BFSI) sector:
BFSI is the second-largest sector in terms of investment in data analytics with a market share of 13.9%. The BSFI sector has witnessed the emergence of a number of companies engaged in data analytics. With US$ 31 billion, India’s fintech market is the third largest in the world. The transaction value of India’s fintech space is projected to reach US$ 140 billion. Players such as Paytm, PhonePe, MobiKwik and Policybazaar have used data analytics and/or AI to grow their business. In an interview with Mr. Ashish Gupta, CTO and CPO of Policybazaar, he said that the company has gained a 90% market share through the interactions of millions of customers and access to datasets and customer interactions. The company leveraged data analytics and AI to pitch the right insurance product to the right customer. On November 16, 2021, Policybazaar was valued at US$ 7.27 billion. The insurance sector is predicted to register a CAGR of 12.5% by 2030, neo banking 50.4% by 2026 and digital lending 33.5% by 2023.
- Retail and E-commerce
The e-commerce sector was estimated at US$ 50 billion in 2020. According to NASSCOM, the e-commerce business drives 1.2 million transactions every day. The sector is expected to topple the US and become the second-largest retail market by 2034. The retail and e-commerce sectors own 5.9% share in the data analytics industry. Both the sectors have used data analytics for predicting trends and providing better recommendations for products to customers. E-commerce giant Amazon said that it has been getting 29% of the sales through hybrid recommender systems. E-commerce companies have also been using data analytics to streamline their warehouse operations. Flipkart utilises data analytics to streamline over 500 distributors across cities in India. The company also uses 100 automated delivery vehicles that are designed to pick and drop products. It expects to sort through 4,500 packages per hour.
Source: Analytics India magazine
Government and big data analytics
India has been investing heavily in big data to increase the efficiency of its governance since 2014. About 75% of big data is helping government departments to improve the lifestyle of its citizens. The government has undertaken many initiatives to create large platforms for large data sets, which will require the acquisition and manipulation of massive amounts of data. These initiatives would improve the life of citizens by providing access to e-governance platforms and can also be used for personal identification. Some of the initiatives by the government are as follows:
- Digital India
The Digital India programme was started with an aim to transform the Indian society through digital empowerment and become a knowledge-based economy. The government had introduced a number of initiatives for e-governance platforms to provide varied services to its citizens. The main goal of Digital India was to offer e-governance services, thus improving the quality of service provided to people. Other objectives were to provide digital infrastructure as a core utility, as evidenced in the availability of high-speed internet, affordable mobile phones, accessibility to cloud services, etc, which further boosts big data. Digital India also focuses on digital empowerment of people through digital literacy. This enabled the government to boost revenue because the programme was able to monitor transactions made by merchants, which also helped in the reduction of the black economy.
Digilocker provides free cloud services for citizens to store their voter ID cards, Aadhaar cards, etc. This initiative helped the country to minimise frauds and corruption in the system.
MyGov a crowdsourcing platform, was started with the aim of sourcing governance ideas from citizens. MyGov was crucial for the government to understand people’s opinions and choices. The government is planning to spend US$ 10.7 billion in digitisation initiatives for FY2022–23.
India’s data analytics industry is huge and expected to touch US$ 118.7 billion by 2026 by growing at a steady pace, driven by the government’s push towards digitisation and the establishment of new data centres. The data analytics industry is projected to create over 11 million jobs by 2026 and increase investments in AI and machine learning by 33.49% in 2022 alone. India’s data analytics industry is anticipated to play a crucial role in the future of Industry 4.0 as well as create significant job opportunities and improve lifestyles. This industry will prove disruptive and lead to a paradigm shift in future.