Indian software market grew 9.9 per cent to $3.78 billiion in 2013: Report

New Delhi: Impending elections and lower profits from government sector investments led the software market in India to grow at a lower pace of 9.9 per cent to $3.78 billion in 2013, research firm IDC today said.

"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," it said in a statement.

However, for 2014, IDC expects the software market in India to grow at a CAGR of 10.3 per cent over the five-year forecast period (2014-2018), primarily driven by segments like 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," IDC India Senior Market Analyst (Software) Shweta Baidya said.

Banking, communication and media, and manufacturing sectors continued to be the top spenders on software in 2013.

"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," IDC said. There was a slight increase in investments from education, insurance and government compared to the previous year on the back od increased awareness and growing competition for next-generation solutions.

Microsoft continued to lead the India software market with a share of 30 per cent in 2013, posting a jump of 1.5 per cent over previous year owing to OS upgrades and Windows XP migration.

It was followed by Oracle, SAP and IBM with a market share of 11.9 per cent, 7.9 per cent and six per cent, respectively. In the July-December 2013 period, the software market in India stood at USD 1.8 billion and registered a half-yearly growth of 6 per cent over January-March 2013 and 10 per cent over H2 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 said.