How can I add additional disk to update the Xcode (Update Catalina to macOS Big Sur needs space 30GB)

How can I add additional disk space to my mac? I need to update the Xcode to the latest version. While trying to update the Big Sur it asks it needs 30 GB. My machine does not have enough space.

How can I add an additional disk to increase the storage in my machine? Any input on this?

You can't make a disk bigger. You can add additional external storage, though on a laptop, having external drives hanging off can be impractical.

You need to remove some of the data on that disk to another drive. A clean system is only c. 11 Gb, so all the rest will be apps and documents that you've added.

As said in the comments, your disk is dangerously full anyway. I would advise keeping 30Gb free at all times, even after installing Xcode.