India to Emerge as World's Fastest Growing Enterprise Software Market

Despite challenging economic conditions, the enterprise software market in India is projected to grow 13.7 per cent in 2012, as revenue reaches US$3.45 billion in 2012, according to Gartner, Inc.


India's enterprise software market is forecast to maintain its strong performance, with an estimated compound annual growth rate (CAGR) of 14.6 per cent from 2011 to 2016 — the highest growth rate in the world.


The increasing globalisation of the Indian economy is leading to a growing need for modern software with the latest features and improved functionality.


"With Indian enterprises continuing to embrace IT to improve productivity and drive growth, penetration of information communication technology (ICT) infrastructure has been growing rapidly during the past decade. The primary drivers of growth have been domestic demand, the growing maturity of users and incremental enhancements in the technology," said Asheesh Raina, principal research analyst at Gartner.


Raina add 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.


"A combination of sustainable domestic demand, presence of global vendors and entry of new small vendors with innovative products have made the overall ecosystem apt for robust growth."


In 2012, India will be the fourth largest enterprise software market in Asia-Pacific. The country is forecast to account for 11.4 per cent of the region's total revenue of US$30.30 billion this year, the equivalent to 1.24 per cent of the total worldwide software of market share of US$278 billion.


By 2016, India's share of the software market in Asia/Pacific is expected to reach 12.68 per cent, representing $5.98 billion in revenue, or 1.66 per cent of total worldwide software market revenue of $359 billion.


In comparison to other countries in the Asia/Pacific region, such as China (with 26.34 per cent share of regional spending in 2011), 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 China and India being the most optimistic and leading the way for budget increases, followed closely by Indonesia and Singapore," says Raina.


Raina notes that the high intention to increase budgets in India is expected because of the rapidly growing economy, globalisation of operations, foreign direct investment (FDI) in retail and aviation 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," says Raina.


Priority areas of software spending include analytics and business intelligence, mobility solutions, cloud computing, collaboration technologies and social media. In the next five, the fastest-growing segments will be enterprise content management, web conferencing & social platforms, CRM, security and office suites.


Indian enterprises are looking for cost effective use of technology before adoption of these tools, resulting in the fast growth of these markets.


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