Indian Software Market to See 3.8% Growth in 2020 Due to Covid-19 Crisis: IDC

The disruption caused by Covid-19 would cause a significant decline in India's enterprise software market this year, tapering down the growth to mere 3.8 per cent (year-on-year), a new IDC report said on Friday. The pandemic has forced enterprises to relook at their IT spend. Enterprises at this point are focusing on operational resiliency, return on investment (ROI), business continuity plans, and parking aside all noncritical projects for the next three to six months at least, according to the report.

However, there has been an increase in spending on remote work enablement and cloud adoption. There will be heightened demand for collaborative applications, application platforms, security software, system and service management software, and content workflow and management applications said IDC. As per IDC's latest Worldwide Semiannual Software Tracker, 2H19 (July-December), the India software market grew by 16 per cent year over year (YoY) in 2H19 compared to 2H18. For 2019, the India software market achieved a revenue of $6.48 billion.

"India stands as the second-largest software market in Asia/Pacific (excluding Japan and China) and also managed to keep its growth pace stronger than some of the major economies in the region," said Mohsin Baig, market analyst, enterprise software, IDC India. "The growth was shaped by demand for a cloud application, application modernization, increasing IT spend by the small and medium-sized business (SBM) segment, cloud-native software start-ups, and government initiative for data localization," he added.

The majority of India enterprises have digital transformation (DX) initiatives in place or plan to implement in the next 12-24 months. Modernising legacy applications, using as-a-service model, and harnessing emerging technologies to enhance customer and employee experience are some of the key DX initiatives, which are acting as the driving factors for the software market in India.

The ongoing pandemic has pushed many enterprises to implement work-from-home (WFH) policies for the first time, and this has created a demand for collaborative applications as well as an increase in security threats. The IDC expects a rise in demand for technologies such as VPN, authentication, endpoint security, encryption and application security.

"The outbreak of Covid-19 have resulted in the partial/complete transformation of working models with the use of collaborative platforms. New software implementations, upgrades, or migrations will be delayed by a few quarters, unless extremely critical," said Shweta Baidya, senior research manager, enterprise software and IT services, IDC India.