Reliance On Technology Creates An Upsurge In Demand For Software In India, Says IDC
20 Jan 2014
IT investments in India witnessed a slight slump in 1H 2013 owing to cautionary approach in the midst of rising economic concerns. This slump also impacted the software market which witnessed slower than expected growth. As per International Data Corporation (IDC), the software market grew by 10.2% y-o-y in 1H 2013 as against the 2H 2012 forecast of 13.3%. The IT software market was pegged at INR 109.13 billion in 1H 2013.
IDC expects the enterprise software market to grow by 10.2% during the course of CY 2013, on the back of fast-growing software submarkets system software (2013 year on year growth 19.0%), collaborative applications (2013 year on year growth 13.5%) and quality and life cycle applications (2013 year on year growth 12.8%). Other key growth areas in 2013 will be security, storage, middleware and consumer applications.
India's enterprise software market continues to be dominated by global giants Microsoft, Oracle and SAP. Microsoft continues to lead in India software market with 31.1% market-share in the enterprise software space, followed by Oracle with 12.4% markets-share. SAP stood third with 6.2% market-share. The top ten vendors together captured 68.4% of total enterprise software spending in India in H1 2013.
Despite economic uncertainties, large organizations and mid size companies continue to steadily increase their software investments, so as to respond in a timely manner to the changing market and enhance their core competitiveness. While large organizations continued to be the primary drivers of enterprise application spending, the small and medium-sized business (SMB) segment is emerging as a key area of focus for software vendors.
"As India develops as an economy and businesses strive to evolve spending on enterprise applications will only grow in the years to come," says Kavita Bhadauria, Research Manager, Software and IT Services, IDC India. "Going forward, software vendors can exploit enormous opportunities as large organizations focus on investments aimed at modernizing and consolidating their IT infrastructure. Vendors offering tightly integrated, mobile-enabled, scalable solutions with an outstanding local support program stand to gain market share."
The Indian corporate environment is witnessing a paradigm shift in the way business is conducted, and is governed by megatrends that are influencing organizations not only in India but in the world. Rising number of mobile devices, and proliferation of the mobile workforce have emerged largely due to the need of the organizations to collaborate and enhance the productivity levels of the employees, keeping the customer satisfaction levels high at all times. IDC sees third platform technologies like big data, cloud computing and mobility being gradually integrated into the IT roadmaps of progressive companies which is further driving the demand for software. H1 2013 witnessed few large banks, large conglomerates and telecom companies investing in these areas.
"Newer technologies such as in-memory computing and big data will increasingly play a pivotal role in verticals such as automobile, retail, government, banking and financial services and telecommunication where the need to accommodate the data repository and churn out valuable insights from the dataset is greatly felt." Shweta Baidya, Senior Market Analyst- Software, IDC India.
Customers are building investment plans not just around cloud, social, mobile, or big data. They are building them around business solutions that include two, three, or all of those things together. However, the transition to 3rd Platform business models will happen gradually and will change the way software is consumed and may impact traditional enterprise application licensing business to some, if not a greater extent, in the short term. That said enterprise application market in India is still expected to grow in double digits at a CAGR of 10.7% over the five year forecast period (2013-2017).
Kavita Bhadauria adds “In next few years, users and vendors will focus on the developing trends of the Third Platform, with cloud computing transforming software models; Big Data driving the development of business analytical software and database and mobile applications creating better customer experience. But to what extent will it impact the dollar spend on traditional packaged software is difficult to measure at this point of time".
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