Biz software mkt in India to surpass $2.4b in 2010

by CXOtoday Staff    May 13, 2010

India s enterprise software market is forecast to maintain its strong performance, with an estimated growth rate of 12.3 percent from 2009 to 2014, the second highest growth rate in the world, according to Gartner. Despite the global slowdown in 2009 and the continuing challenging economic conditions, the software market in India is expected to rebound to an annual growth rate of 11.1 percent in 2010. Gartner analysts said that the increasing globalization of the Indian economy is leading to a growing need for modern software with the latest features and improved functionality.

Software vendors have strong growth potential in India, but also face the challenges of operating in a commercial environment that is still developing, said Asheesh Raina, principal research analyst at Gartner. Indian enterprises have historically preferred to develop applications using their own labour because it costs less. However, this tendency has resulted in legacy and quickly obsolete software as well as inhibiting Indian enterprises sustainability and business IT continuity. Growth will mainly be driven by replacing immature infrastructure with standardised systems and the large vendors stand to benefit.

According to Gartner’s latest forecast in 2010 India will be the fourth largest software market (US$ 2.4 billion) in Asia/Pacific, and the country is forecast to account for 11 percent share of the region s total revenue of US$21.72 billion in 2010, the equivalent to 1.04 per cent of the total worldwide software US$232 billion market share.

By 2014, India s share of the software market in Asia/Pacific is expected to reach 12 percent, representing US$3.8 billion in revenue or 1.3 per cent of total worldwide software market revenue of US$299 billion. Compared with mature countries in the Asia/Pacific region such as Australia (with 21 percent share of regional spending in 2010), the software market in India is still relatively young and evolving.

A 2009 Gartner survey found that 50 percent of respondents in India planned to increase their software spending in 2010, far higher than other countries surveyed, such as those in Europe, the Middle East and Africa, North America, and Latin America. The same survey found that organizations in India in 2010 are expected to spend approximately 27 percent of their IT budgets on software and also the same (27) percent on hardware.

India has balanced growth and will tend to increase spending equally on infrastructure, hardware and application software space through the forecast period to 2014, said Raina. Optimism regarding spending within Indian organizations reflects confidence in India s regional economic performance, as well as the need to adopt better technology to effectively compete in a tougher global environment.

Priority areas of software spending include enterprise resource planning (ERP), office suites, operating systems and database management systems.

In the next five years, the fastest-growing segment will be Enterprise Content management (30 percent), Virtualization (27.7 percent) and web conferencing and team collaboration (26.2 percent), although it is growing from a small base. According to Gartner, Indian enterprises are lagging behind in terms of adoption of these tools, resulting in the fast growth of this market.