Insights: India's Tech Startup Funding Hits a 5-Year Low
Here are the top insights we are tracking this week across the Middle East and Asian region.
India's Tech Startup Funding Hits 5-Year Low, Drops to 5th Global Rank
India's tech startup ecosystem witnessed its lowest funding in the last five years, totalling $7 billion until December 5, marking a 72% decline compared to the $25 billion in the previous year, according to a report by market intelligence platform Tracxn.
The funding slowdown led to India's global ranking dropping from 4th to 5th place among the highest-funded geographies globally in 2023.
Late-stage funding saw the most significant drop at over 73%, followed by early-stage funding (70%) and seed-stage funding (60%). Meanwhile, the FinTech sector continues to lead the funding despite a funding decrease from $5.8 billion in 2022 to only $2.1 billion received in funding so far in 2023.
Per location, Bengaluru, Mumbai, and Delhi-NCR remained the top regions that attracted significant funding in India's tech startup ecosystem.
The report noted that only two new unicorns were created in 2023, compared to 23 in the previous year, and acquisitions dropped by 36% from 187 in 2023 to 119 in 2023.
Saudi Arabia's IT Services Spending to Lead the Middle East and Africa
Spending on IT services in Saudi Arabia is expected to surpass other countries in the Middle East and Africa, according to the International Data Corporation (IDC).
With a forecasted compound annual growth rate (CAGR) of 9.0% over the 2022–2027 period, the market is projected to reach $6.4 billion in 2027.
The kingdom's IT services market growth is attributed to Saudi Arabia's ambitious Vision 2030 strategy, which emphasizes economic transformation through digitalization and mega projects.
Despite global challenges, the kingdom's resilience has fueled demand for emerging technologies, driving digital transformation in the public and private sectors. Key industries driving IT services spending include government, finance, and media and communications.
The report also underscores the pivotal role of IT service providers in this ongoing transformation, with the managed services market expected to see rapid growth at a CAGR of 13.3% through 2027.
Indian IT & Business Services Market Records 6.3% YoY Growth in H1 2023
The Indian IT and business Services market reached a value of $7.14 billion in 1H2023, marking a 6.3% YoY growth, according to the International Data Corporation (IDC).
This marks a slowdown in growth rate compared to H1 2022 (7.4%), however, it reflects Indian enterprises' continued investment in critical IT projects focused on enhancing customer experience, cybersecurity, and IT infrastructure optimization.
Within the market, IT Services contributed 78.9%, growing by 6.7% in H1 2023. Project-oriented services led growth at 6.9%, followed by managed services at 6.0%, and support services at 5.3% in 1H2023.
Despite caution in IT spending due to macroeconomic challenges, future investments are expected to be fueled by cloud, cybersecurity, and emerging technologies like Generative AI and 5G.
The IT & Business Services market is projected to grow at a CAGR of 7.2% between 2022 and 2027, reaching $19.59 billion by the end of 2027.
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