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29 May 2014

According to  International Data Corporation (IDC), the India software market grew 9.9% in CY2013, or INR 220.9 billion (USD 3.78 billion). The software market in India witnessed slowed growth last year, due to multiple factors including impending elections, delayed payments, lower profits from government sector investments and rupee depreciation among others.

The Banking, Communication and Media, and Manufacturing sectors continued as the top software spenders.Manufacturing sector is set for an impressive growth in terms of IT adoption due to continued efforts by the government to revive the collapsing sector owing to ever rising costs, high inflationary pressures and changing government policies.

In addition, there was a slight increase in investments from Education, Insurance and Government compared to CY2012, attributed to increased awareness and growing competition for next generation solutions.

The software market is gradually moving towards cloud applications amidst rising economic turmoil;  vendors leveraging the cloud are able to offer cost-effective products and solutions to their customers. Market consolidation through M&A activity is another driving forces for vendor growth. For example, IBM acquired Trusteer and SoftLayer, Microsoft acquired Nokia, EMC acquired Aveksa, Cisco acquired Sourcefire and Salesforce acquiredExactTarget , emphasizing how vendors expanding their portfolio to reach newcustomers or to provide wider breadth of solutions to existing customers.

Customers clearly prefer vendors who offer integrated solutions that work across multiple platforms such as cloud and mobile. Vendors realize the changing preferences and hence have been on an acquisition spree to increase share of wallet from key accounts and increase new customer acquisitions,” says Shweta Baidya, Senior Market Analyst, Software, IDC India.

Niche security vendors have become an attractive target for acquisitions by major vendors needing to provide a secure IT environment to their customers. “Regulatory Compliance and the need to safeguard enterprise IT infrastructure from internal as well as external threats will greatly drive the adoption of security software solutions such as firewalls, anti-virus solutions, Data Loss Prevention (DLP), Encryption, Identity and Access management, and Mobile Device Management (MDM) solutions. among others,” adds Baidya .

Figure 1

Microsoft continued to lead the India software market with a share of 30.0% in CY2013, a jump of 1.5% compared to CY2012 owing to OS upgrades and Windows XP migration. The vendor was closely followed by Oracle, SAP and IBM with a market share of 11.9%, 7.9% and 6.0% respectively for the mentioned period. Some of the vendors with niche specialization such as cloud or analytics fared well in terms of market penetration. Ramco, Salesforce, QlikTech, VMware, NewGen and Amazon among others, managed to strike the right chord among the end-users through their focused solution

2H 2013 Highlights:

India software market for 2H 2013 stood at INR 113.7 billion (USD 1.8 billion) and registered a half yearly growth of 6.0% over 1H 2013 and a year-on-year growth of 10.0% over 2H 2012. The lower than expected growth of the market was a derivative of a wait-and-watch approach adopted by most of the large enterprises owing to economic and political uncertainty. As 2014 progresses, the enterprises are expected to loosen their purse strings and resume investments.

IDC India Forecasts:

IDC expects the India software market to grow at a CAGR of 10.3% over the five year forecast period (2014-2018). The growth will be primarily driven by markets such as security software, system software, enterprise applications and analytics, which continue to be the top priorities for enterprises in terms of IT investments. “With the formation of a stable government which favours technology investment to drive development, enterprise IT initiatives will witness a major boost, propelling software investments, starting last quarter of 2014,” says Baidya.

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