India's software market grows slower than expected in H2 2015

The software market growth in India in the second half of year 2014 turned out to be slower than expected owing to prolonged economic revival. According to IDC India Software Tracker, the India software market registered a stable year-on-year growth rate of 10 percent. However, the market is expected to gain momentum starting in 2016 as deals should reach closure and implementation begins, claimed the market research firm. [caption id=“attachment_2024681” align=“alignleft” width=“380”] Thinkstock[/caption] 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 percent year on year while the Applications market saw growth of 10.8 percent year on year and the SIS market grew by 8.5 percent year on year during the second half of 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 percent. 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 percent of the total revenue share. 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. “Some of the larger software vendors restructured their organisations 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.