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India internet monthly newsletter, September 2019

Rohan Dhamija Partner, Director Head - Middle East & India (South Asia), Consulting

"The fourth (September 2019) edition of Analysys Mason's monthly newsletter features articles on the internet and digital markets in India."

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India internet monthly newsletter, September 2019

We are delighted to share with you the September edition of our internet newsletter, which builds on our series of newsletters that focus on the internet and digital space in India. In this edition, we assess two nascent but promising sub-sectors within the internet/digital space that have attracted significant interest from marquee investors across the globe. This month’s articles focus on the growth of the online home services market, within which UrbanClap has emerged as a particularly successful player, and the evolution and future of artificial intelligence in India.

The USD30 billion traditional home services market in India is fragmented and unorganised , which is creating significant potential for disruption by online players. Online home services players such as UrbanClap leverage the business principles of demand and supply aggregation through online marketplaces, which provide convenience, as well as improved transparency and service quality. This asset-light model has enabled players in this market to scale rapidly: transaction value in the online home services market is expected to grow at a CAGR of around 56% over the next few years to reach USD850 million by FY2023. UrbanClap, the clear market leader in the online space, has been favoured by investors as well. However, UrbanClap must exercise category diversification and strategic geographical expansion to deliver the next stage of growth.

Although the AI market in India is still nascent compared with leading technology hubs worldwide, it is set to grow significantly in the coming years because of the increasing volume of data traffic in the country, increased cloud adoption and the government’s focus on AI. The size of the AI market in India in 2018 is estimated to have reached USD230 million. If the Indian AI market keeps pace with global growth trends, it is expected to reach around USD5 billion by 2025 at a CAGR of 50–60%. Healthcare, location intelligence and conversational chatbots are examples of major applications that we expect to lead the growth of AI in the country.

This newsletter also provides a short summary of our previously published insights on the online grocery segment and the online Point of Sale (POS) market. Both articles have generated keen interest, new thoughts and appreciation from our investor clients.