Digital marketing companies in India had waited for the Union Budget 2018 with baited breath. Given the trajectory of events, policy initiatives and economic reforms pursued by the Government of India in the last four years, the digital technology and consulting vertical in India was counting on this year’s budget to function as the compass to assess the short and intermediate-term measures being taken by the government to stimulate aggregate effective demand for digital transformation of corporate enterprises, brands and governance.
At TIS, the leading digital marketing company in India, we are cautiously optimistic about the slew of economic reforms announced by the Government of India in this year’s union budget while hoping that it points towards market development of a strong digital economy in India and consequently the growth of world-class digital consulting companies in India based on a value-based model. We share our analysis of the union budget 2018 from the stand point of the digital strategy consulting industry vertical.
Backdrop to the Union Budget 2018
It is a vote an account budget that allows the industry to see through the sustainability and stability of the major policy initiatives of the government going into the year 2019 and beyond. Second, there are significant challenges and opportunities on the road ahead moving forward towards realizing the full potential of gross value addition in the domestic economy.
A report published jointly by The News Line and NASSCOM projects the gross value addition (GVA) at US$ 1.8 trillion, of which new digital ecosystems may contribute 45-50% at US$ 905 billion, digital payments and eCommerce are likely to contribute US$ 15 billion, electronics manufacturing is likely to contribute the US $ 420 billion, telecom and media are likely to account for another US $120 billion and the IT/BPM vertical is likely to account for another US $360 billion in digital revenues by the year 2025.
While this scenario augurs well for the digital strategy consulting companies and the information technology services industry vertical overall, there are issues to be addressed and not all of them may be resolved through budgeting alone.
India has only 150000 engineers skilled in building AI technologies. India has a severe shortage of engineers in these technologies, especially when countries like the US have a talent pool of 850,000 AI engineers.
Fiscal Outlay for the Digital MarketingIndustry in India
The digital marketing vertical in India has a lot to cheer about the fiscal outlay dedicated by the Government of India in the union budget 2018. The following highlights of the total fiscal outlay for the Indian digital strategy consulting industry hold promise:
Digital Infrastructure Creation in Rural India
The union budget of 2018 focuses on the creation of digital infrastructure in rural India. Wider and faster internet connectivity is an imperative to taking the digital transformation of the economy to the remotest corners of the economy and unleashing untapped value. Highlights of the digital infrastructure creation in rural India are as follows:
These above mentioned measures of digital infrastructure creation in the rural economy aim to open avenues of economic growth by bringing an additional 50 million Indians under the net of the digital economy, while stimulating the demand for customized content marketing, mobile apps development and UI & UX design services in the verticals of information, communication and entertainment (ICE), education, e-governance, tourism and health care.
Digital Payments Outlook and Insights from the Union Budget 2018
The union budget makes efforts to streamline the growth of the digital payments segment in India with an eye on moving towards a less cash economy, digital financial inclusion and seamless financial transactions. Major initiatives to augment digital payments include:
The road map in the union budget towards leveraging digital technology services has several implications on different verticals and thus by implicit logic on the demand for specific digital marketing services.
First, the assigning of unique IDs to corporate enterprises shall enable on-boarding of businesses into digital platforms for business, compliance and regulatory objectives.
This shall pave the way for enterprises that operate in brick and mortar format to move up the digitization platform to become click and mortar (CAM) enterprises, effectively stimulating demand for search engine optimized websites, social media optimization, and mobile application development.
Second, the launch of AadharPay promises to bring consumers at the bottom of the pyramid into the digital economy increasing demand for design and development of secure payment gateway integrated SEO enabled business websites in verticals like online retail, food & beverages, quick-service restaurants (QSRs), ICE, BFSI, healthcare, passenger transport, commercial freight, and pharmacy.
Third, the participation of SIDBI in ensuring cash back schemes for merchants shall incentivise online business development and sales by reducing shoe leather costs of dealing in cash, thereby allowing digital consulting companies to offer inputs into creating and maintaining digital portfolios of business like websites, apps, and social media properties.
Compliance and Regulation of Digital Payments
The Government of India has proposed to curate and secure the digital payments ecosystem in India with two measures that include:
R&D Initiatives and Training the Digital Services Industry Workforce
The union budget 2018 looks to address issues of skilling the workforce and augmenting efforts of research and development in cutting edge technologies with a specific reference to artificial intelligence and machine learning. Measures announced in the domain are as follows:
TIS, the leading digital marketing service company in India looks forward to the union budget as favouring business growth of the industry, market development in the domestic economy for digital services like website development and design, hybrid and native mobile applications development, user interface and user experience (UI &UX) and custom product development (SaaS) services. We welcome the initiatives to develop the potential of the domestic market of India while taking the movement of digital transformation of brands to rural areas in a big way.