Indian enterprise software market to growth 14% to $3.45 bln

Despite challenging economic conditions, the enterprise software market in India is projected to reach $3.92 billion in 2013, a 13.9 per cent growth over 2012 revenue of $3.45 billion, according to Gartner, Inc.

Last year, overall Indian enterprise IT spending, which includes hardware and services — in addition to software — was forecast to increase by 10.3% to $39 billion of IT spending in 2012.

In April last year, Gartner had forecast India to be the fourth largest enterprise software market in Asia/Pacific this year.

India would account for 11 per cent of the region’s total revenue of $29.33 billion USD for Asia/Pacific this year, or about $$3.22 billion, or about 1.15 per cent of the total worldwide software of market of $280 billion USD billion.

India’s enterprise software market is also forecast to be the third fastest growing in the world through 2016 with growth in excess of 13 percent a year, it had said last year.

“Growing maturity of Indian users is an important driver for overall growth. Compounding the demand is the ongoing tendency for greater customer services along with the continued drive for IT cost savings, as well as the incorporation of emerging technologies into solutions, such as mobility, social, cloud and business process management, “ said Asheesh Raina, principal research analyst at Gartner. “These new technologies, and demand for agility, brings in additional urgency, and demand, for IT investments.”

India also enjoys a rich presence of international software and hardware vendors, backed by a very strong ecosystem of system integrators, service providers and business partners. The combination of sustainable domestic demand, presence of global vendors, entry of new small vendors and the Nexus of Forces (as Gartner defines it as the convergence of new mobile, social, cloud and information computing environments) are the key drivers for high sustainable growth for India.

In 2013, India will be the fourth largest enterprise software market in Asia/Pacific. The country is forecast to account for 11.6 per cent of the region’s total revenue of $33.73 billion in 2013, the equivalent to 1.32 per cent of the total worldwide software market of $296 billion. By 2017, India’s share of the software market in Asia/Pacific is expected to reach 13.11 per cent, representing $6.7 billion in revenue, or 1.74 per cent of the total worldwide software market revenue of $383 billion. In comparison to other countries the software market in India is still relatively small and evolving.

“End users in Asia/Pacific are expecting to increase their spending on application and infrastructure software, with India and China being the most optimistic and leading the way. It is closely followed by Malaysia and Singapore,” said Mr. Raina. “Increased budgets in India are expected because of the growing economy, increased globalization, foreign direct investment (FDI) in retail, aviation, media and ongoing investment in India as a customer service-related outsourcing destination. 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.”

In the next five years, priority areas of software spending will include web conferencing; teaming platforms and social software suites; enterprise content management; customer relationship management (CRM) and security. Indian enterprises are looking for cost effective use of technology before adoption of these tools, resulting in the fast growth of these markets.

According to Gartner, global spending on software by enterprises (companies) is around $268 billion in 2012, out of which around $100 billion is spent on buying applications. Applications are the top-level software that are used by the end consumer, while other software lie beneath the applications and enable them to function.

Cloud (in the traditional sense) would account for $89 billion spending across the globe in 2012. Out of this, around $10 billion would be spent by companies to buy access into cloud-based applications or SaaS, Gartner said.