India Software Market Witnesses Consistent Growth of 10.0% During 2H 2014 Showing Signs of Growth and Revival: IDC
25 Jun 2015
The software market growth in India in the second half of calendar year 2014 turned out to be slower than expected owing to prolonged economic revival. According to the International Data Corporation (IDC) India Software Tracker for 2H 2014, the India software market registered a stable year-on-year growth rate of 10.0%. However, the market is expected to gain momentum starting in 2016 as deals should reach closure and implementation begins. Some of the reasons for the stable growth include steady double-digit growth for the top vendors such as SAP, Microsoft, and Oracle. In addition, more investments are expected to pour in from sectors such as Government, Manufacturing and Retail.
The Indian IT Software market is segregated into three primary markets: Application Development Deployment (AD&D), Applications, and System Infrastructure Software (SIS). The total AD&D market grew by 9.5% year on year while the Applications market saw growth of 10.8% year on year and the SIS market grew by 8.5% year on year during the second half of calendar year 2014. Some of the secondary markets that registered a strong growth during the review period include Application Platforms, Content, Operations & Manufacturing Applications, and Integration & Orchestration Middleware, among others.
Some of the major transformational projects kick-started by the Government, including Digital India, Make in India, and Pradhan Mantri Jan-Dhan Yojana have already pushed the adoption in other sectors too. Further, the small & medium enterprises (SME) segment is the new sweet spot for most of the vendors who are trying to push their Software-as-a-Service (SaaS) offerings among SMEs through their various partnerships.
IDC expects the software market to grow at a healthy pace over the next five years (2015-2019) with a compound annual growth rate (CAGR) of 10.6%. Some of the software categories that will trigger the uptake include mobile applications, in-memory analytics, database security and privacy, open source applications, DLP, encryption, and application security, among others.
Microsoft, Oracle, SAP, IBM and Synopsys retained their dominant position in the market, collectively capturing more than 60% of the total revenue share.
Operating System (OS) upgrades by customers along with bundled Office offerings and Office 365 uptake contributed to Microsoft's growth during the review period. Oracle gained a steady foothold in vertical industries that adopted cloud solutions to manage their workforce and to integrate their CRM applications with ERP to get a holistic view of their customers. SAP registered robust growth owing to the migration of its existing customers to SAP Cloud powered by its in-memory platform, SAP HANA
Manufacturing, Banking, Finance, Securities and Investment Services (BFSI), IT/ITeS, and Communication & Media were the top verticals which invested in next generation solutions to gain a competitive edge in the market. Some other sectors that have shown strong inclination towards IT adoption includes retail, government, entertainment and hospitality.
The Union Government has a clear focus on leveraging technology for transformational projects and to help improve infrastructure, build smart cities, address urbanization, and revive the manufacturing sector.
Manufacturing companies are making an effort to integrate social media platforms with back-end systems to implement feedback during the production stage itself and enhance customer offerings. Telematics and Robotics are some of the other areas where the Manufacturing sector is beginning to display interest and discussions have started with vendors for long-term gains.
Use of big data and analytics in the retail sector has helped companies to track information generated across multiple platforms such as CRM, Supply Chain Systems, Sensor Data, e-mails, Adsense Analytics and the likes to identify the latest trends and buyer sentiments and re-align their inventory levels accordingly.
"Some of the larger software vendors restructured their organizations in line with the emerging technologies and re-aligned their strategies to capture the mindshare in the growth markets such as SME, cloud, analytics, and mobility. This has worked quite well for them and they have managed to grow in spite of the uncertainty in the market," said Shweta Baidya, Senior Market Analyst, Software, IDC India.
"Application developers are becoming a strong part of the larger ecosystem and vendors are working closely with the developer and partner community to offer best-in-class solutions to their target customers," added Baidya.
Application development services, Big Data analytics and discovery, Content applications, Customer relationship management applications, Integration and process automation middleware, Messaging security, Operations and manufacturing applications, Secure content and threat management, Security management, Software as a service
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