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According to the International Data Corporation (IDC) Worldwide Semiannual Software Tracker 1H21 (Jan-June), the Indian software market is expected to exceed $8.2 billion by the end of calendar year 2021. The Indian software market was pegged at $4.0 billion in 1H21, recording 15.9% year-on-year (YoY) growth from 1H20. India accounted for an 18.3% share of the overall Asia-Pacific excluding Japan and China (APeJC) software market during 1H21. Microsoft, Oracle and SAP maintained their leadership positions in the Indian market during the first half.
Hemanth Gudiwada, Associate Market Analyst at IDC India, said: “Indian enterprises are pursuing their digital transformation initiatives with a clear focus on scalable, secure and agile frameworks. They have stepped up their investments in cloud for scalability, AI to leverage data accurately and serve customers more efficiently, and security to protect their network and systems with more emphasis on SASE frameworks and Zero Trust, identity management solutions, among others. As a result, the corresponding software markets are experiencing accelerated growth, and growth in these markets is expected to continue over the next two quarters. Technology providers continue to invest in India to fully exploit this opportunity and explore the untapped potential of Indian companies. »
IDC classifies the software market into three main categories: applications, application development and deployment (AD&D), and system infrastructure (SI) software. Applications contributed 60.9% to overall market revenue, followed by AD&D and SI software with 21.0% and 18.1% shares, respectively, in HY21.
According to IDC’s current estimates, collaborative applications, engineering applications, workflow and content management applications, customer relationship management (CRM) applications, and enterprise resource management applications ( ERM) dominate the software segment in terms of revenue. The collaborative applications market saw the strongest growth of 40.1% in 1H21 followed by systems and services management software and artificial intelligence platforms with 31.8% and 30.7% respectively.
Indian Market Forecast:
IDC estimates that the overall software market in India is expected to grow at a compound annual growth rate (CAGR) of 14.0% during the period 2020-2025. The cloud has become an essential part of companies’ digital strategy, with migration to the cloud becoming a priority. IDC estimates that the platform-as-a-service (PaaS) and software-as-a-service (SaaS) markets’ contribution to the overall software market will increase from 37.1% in 2020 to 59.0% in 2025, with a CAGR of 25.1% with more emphasis on PaaS solutions. IDC expects an acceleration in demand for technologies such as robotic process automation (RPA) software, artificial intelligence (AI) platforms, conferencing and collaborative applications, IT service management software (ITSM), digital commerce applications, among others.
As policies around data protection and data residency have become clearer, Indian businesses will review their existing compliance frameworks and rework them to align with the latest policies. Therefore, data security and privacy solutions will continue to be a top priority for technology investment. Cloud management, advanced analytics, customer experience and security will continue to be an important technology area for companies focusing on digital strategy.
Shweta Baidya, Senior Research Manager for Software & IT Services at IDC India, said, “The Indian software market continued to show the strongest growth trajectory with the highest growth in the APeJC region. The pent-up demand resulted in a sharp increase in market growth during the 1st half of 2021, compared to 2020. Most companies have already reached pre-pandemic normalcy levels, while some organizations expect that operations normalize by the end. of 2021 or first half of 2022. Collaborative applications, artificial intelligence platforms, systems and service management and security saw the highest growth during the period due to the adoption of solutions based on the cloud. Software vendors have realigned their portfolios and offerings to meet the changing needs of their customers. There is a strong push towards agile, scalable, and secure solutions, and companies are clearly prioritizing vendors with platform offerings over point solutions.
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