According to the International Data Corporation (IDC) Worldwide Semiannual Software Tracker 1H21 (January-June), the India software market is estimated to surpass US$8.2 billion by the end of the calendar year 2021. India software market was pegged at US$4.0 billion in 1H21, registering a growth of 15.9% year-over-year (YoY) compared to 1H20. India accounted for a share of 18.3% of the overall Asia-Pacific excluding Japan and China (APeJC) region software market during 1H21. Microsoft, Oracle, and SAP maintained their leadership position in the India market during the first half of the year.
Hemanth Gudiwada, Associate Market Analyst at IDC India says, “Indian enterprises are continuing their digital transformation initiatives with a clear focus on scalable, secure & agile frameworks. They ramped up investments on cloud for scalability, AI to leverage data accurately and serve the clients more efficiently, and security to protect their network & systems with greater emphasis on SASE & Zero Trust frameworks, identity management solutions, among others. As a result, the corresponding software markets are experiencing accelerated growth, and the growth in these markets is expected to continue for the next couple of quarters. Tech providers are continuing to invest in India to fully utilize the opportunity and explore untapped potential across Indian enterprises.”
IDC classifies the software market into three primary categories: applications, application development and deployment (AD&D), and systems infrastructure (SI) software. Applications contributed 60.9% to the overall market revenues, followed by AD&D and SI software with shares of 21.0% and 18.1%, respectively, in 1H21.
As per IDC’s current estimates, collaborative applications, engineering applications, content workflow & management applications, customer relationship management (CRM) applications, and enterprise resource management (ERM) applications are leading the software segment in terms of revenue. The collaborative applications market witnessed the highest growth of 40.1% during 1H21 followed by system and service management software and artificial intelligence platforms at 31.8% and 30.7% respectively.
India Market Forecast:
IDC estimates India’s overall software market to grow at a compound annual growth rate (CAGR) of 14.0% during 2020–2025. Cloud has become a critical element of enterprises’ digital strategy, with cloud migration becoming a priority. IDC estimates the contribution of platform-as-a-service (PaaS) and software-as-a-service (SaaS) markets to the overall software market to increase from 37.1% in 2020 to 59.0% in 2025, growing with a CAGR of 25.1% with more emphasis on PaaS solutions. IDC expects acceleration in demand for technologies such as robotic process automation (RPA) software, artificial intelligence (AI) platforms, conferencing & collaborative applications, IT service management (ITSM) software, digital commerce applications, among others.
As the policies regarding data protection and data residency have become clearer, Indian enterprises will relook at their existing compliance frameworks and rework to align with the latest policies. As a result, data security and privacy compliance solutions will continue to be a top technology investment priority. Cloud management, advanced analytics, customer experience, and security will continue to be an important technology area focus for companies focusing on digital strategy.
Shweta Baidya, Senior Research Manager for Software & IT Services at IDC India, says, “India software market continued to display the strongest growth trajectory with the highest growth across the APeJC region. The pent-up demand culminated in a sharp spike in the market growth during 1st half of 2021, compared to 2020. Most of the enterprises have already reached the pre-pandemic normalcy levels, while some of the organizations expect operations to normalize by the end of 2021 or first half of 2022. Collaborative applications, Artificial intelligence platforms, system and service management and security witnessed the strongest growth during the period due to the adoption of cloud-based solutions. Software vendors have been re-aligning their portfolios and offerings to cater to the evolving requirements of their clients. There is a strong push towards solutions that are agile, scalable and secure, and enterprises are clearly prioritizing vendors with platform offerings over point solutions.”