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Businesses in India are digitally transforming rapidly, but not evenly: McKinsey

Businesses in India are digitally transforming rapidly, but not evenly: McKinsey

In the digital economy, India is holding a strong presence. Whether its presence is majored on metrics based on internet connections or app downloads, India is exceeding most of the other countries when it comes to volume and growth of the digital economy.

Government, as well as the private sector, are expanding high-speed connectivity all around the country and delivering the necessary hardware and solutions to bring the consumers and enterprises online.

According to the new report by McKinsey Global Institute, India is one of the largest and fastest-growing markets for digital consumers, having more than half a billion internet subscribers in 2018.

The report, titled “Digital India: Technology to transform a connected nation”, McKinsey Global Institute highlights the rapid adoption of digital technologies in the country and their potential value to Indian economy by 2025.

Following are the key findings of the McKinsey’s Digital India report:

1. India has more than 560 million internet subscribers

There are more than 560 million internet subscribers in India, making the country only second to China.

On average, mobile data users in India consume 8.3 GB of data per month, compared to 5.5 GB for mobile users in China.

There are 1.2 billion mobile phone subscriptions in India, which have downloaded over 12 billion apps in 2018.

As per the report, India is digitally transforming faster than any other country in the study.

The current trends suggest that the number of internet users in India will increase by 40% to reach between 750 million and 800 million by 2023. Further, the number of smartphones will double to between 650 million and 700 million by 2023.

digital adoption in India

2. Mobile data costs dropped by more than 95% since 2013

Innovation in private-sector has brought internet services to millions of customers. for instance, Reliance Jio bundled virtually free smartphones with subscriptions to its mobile service. This strategy has encouraged innovation in India.

The costs of mobile data in the country dropped by over 95% since 2013. As a result, the average mobile data consumption per month per user is increasing at 152% annually. This growth rate is more than twice the rates in the US and China.

3. Digital could create up to 65 million jobs in India by 2025

The report highlights that the productivity unlocked by digital transformation in India is estimated to create 60 million to 65 million jobs in the country by 2025. Most of these jobs will demand functional digital skills.

However, some 40 million to 45 million workers will need retraining and redeployment.

digital economy in India

4. Jobs of the future will demand new skills

Future jobs will need functional digital skills and literacy. For instance, more delivery workers will need to use apps for navigation, shop floor workers will need to understand control systems.

Repetitive and routine tasks like data processing will be automated. The demand for skills in emerging technologies, higher cognitive, social, and emotional skills like creativity and teamwork will also increase.

5. Businesses in India are digitally transforming rapidly, but not evenly

The survey witnessed a relatively uneven pattern of digital transformation among the businesses in India. Differences in digital adoption within sectors are greater than those across sectors, the report says. Some of the sectors consist of more digitally sophisticated enterprises than others.

6. Small businesses are closing the digital gap with larger firms

Large businesses have the required financial resources and expertise to invest in modern technologies like artificial intelligence (AI) and the internet of things (IoT). But the growth in high-speed internet connectivity and dropping of data costs are opening new digital opportunities for small businesses.

In fact, the report says that the number of small businesses that accept digital payments is more as compared to large firms.

94% of small businesses accept debit or credit card, compared to 79% large ones. Whereas, 78% of small businesses accept digital wallets compared to 49% large ones.

Suggested reading: IBM CEO reveals three core areas for moving to Chapter 2 of digital transformation

7. India is the second-fastest digital adopter among 17 major digital economies

Although the digital adoption index of India is low (32), but the growth in digital adoption index is very high (90). It is only second to Indonesia whose index stands at 99.

digital adoption index of India

For the full report, click here.

Images source: McKinsey

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