Spend-IT: Nykaa toning down tech spends

Nykaa, an online beauty and lifestyle retailer, has decelerated its technology spend growth after sprucing up its IT costs in the previous years.

The company saw its tech spend rise to ₹137 crore in the year ended March 31, 2025, up from ₹123 crore in FY24. The Mumbai-headquartered company had crossed the ₹100-crore milestone in tech expenditure only last year.

Although Nykaa’s IT outlay has continued to rise year-on-year, the pace of growth has been slowing — from 56% in both FY22 and FY23 to 25% in FY24, and further down to 11.4% in FY25.

“Total capex in FY2025 stood at ₹128 crores (excludes goodwill/ trademarks on account of M&A), up 11% YoY, primarily directed towards expanding our beauty store network (the highest number of stores added in a single year) and investments in technology and automation,” P Ganesh, the chief financial officer, noted in Nykaa’s annual report.

Nykaa did not respond to TechCircle’s specific questions on technology expenditure.

The online retailer reported that it achieved significant cost savings in FY25 by optimising its cloud infrastructure and communication expenses. The company attributed it to smarter infrastructure management and addressing legacy tech debt, underscoring its focus on financial prudence while continuing to invest in advanced technology.

A key driver of operational efficiency has been the adoption of generative AI tools. The use of AI-powered coding assistants has boosted engineering productivity, enabling faster innovation and feature rollouts. Nykaa has also deployed an AI analytics copilot to enhance data-driven decision-making, along with AI assistants that streamline customer service and improve catalogue understanding. These measures have translated into better click-through rates and a substantial increase in annualised gross merchandise value (GMV). The company further strengthened the shopping experience with intelligent filters, personalised rankings, and advanced spell correction to ensure more relevant search results.

Notably, at the company’s annual general meeting, chairperson and founder, Falguni Nayar, said, “An increasing share of our code is now written by AI,” she noted, setting a target of 50% AI-generated code by the end of the year, ahead of industry benchmarks.” Currently, Nykaa operates 40 GenAI initiatives across functions such as customer experience, operational efficiency, and product development.

Further, security and compliance remained a central focus, with the company reporting a marked reduction in customer fraud during the year, owing to reinforced safeguards. Proactive automation tools to identify and mitigate risks, combined with strategic migrations and large-scale infrastructure projects, ensured agility and reliability.