Indian Software Market Grows 10.7 Percent in H1 2014: IDC

Political stability and improving economic sentiments have helped the software market in India grow by 10.7 percent in January-June 2014 period as compared to first half of previous year, research firm IDC said Monday.

The formation of a stable NDA government resulted in some amount of positivity in the market which reflected in IT investments by major verticals like banking, financial services and insurance (BFSI), retail, manufacturing and e-commerce, IDC said in a statement.

The period also saw few of the big vendors closing major deals which were in the pipeline since early 2013 but did not materialise owing to economic and political uncertainties, it added.

Though IDC did not disclose the size of the market in the first half of 2014, it had pegged the Indian IT software market at Rs. 10,913 crores in January-June 2013 period.

IDC expects the software market to grow at a stable pace in the next five years (2014-2018) with a healthy CAGR of 10.5 percent.

Some of the areas which are expected to witness software uptake are mobile application development & mobile device management, security software, system software, analytics and engineering applications, IDC said.

In the January-June 2014 period, Microsoft led with 31.8 percent share of the software vendor market, followed by Oracle at 12 percent, SAP (6.5 percent), IBM (5.5 percent) and Synopsys (4.2 percent).

BFSI, manufacturing and communication & media were the top verticals which invested in upgrades and new licenses.

Some of the sectors to watch out for in future include entertainment, retail, e-commerce, education and hospitality, IDC said.

"There has been a shift in the mindset of users across these industries. IT investments are now made not only for process improvements but also for growing business opportunities and improving customer experience," it added.

Some of the solutions which were readily accepted across verticals included customer analytics, mobile solutions, cloud solutions, customer management solutions, omni-channel management systems, data loss prevention etc.

Government initiatives like Mobile Seva, Digital India, Pradhan Mantri Jan Dhan Yojana and the likes will be instrumental in triggering adoption of software solutions in the coming years, IDC said.

Launch of various schemes and policies is expected to catalyse software uptake by manufacturing, retail, travel & tourism and BFSI in the coming 2-3 years, it added.

"Large as well as SMB (small and medium business) customers are looking at ways to curb their capital expenditure and are keen to embark on the cloud journey," IDC India Senior Market Analyst (Software) Shweta Baidya said.

This has led the vendors to make their licensing policies more flexible and easier so that existing customers could smoothly transition to a cloud environment, she added.

There has also been a rise in adoption of open source software, especially among the SMB segment which is shying away from blocking its capital on expensive proprietary software.

Small and co-operative banks, retail and telecommunication sectors are looking at customised solutions based on open source platform for greater flexibility and cost reduction, it said.