Bangalore, May 27 (IANS) The resilient Indian software industry is poised for a strong revenue growth this fiscal (2013-14), as social media, mobility, analytics and cloud redefine the multi-billion dollar business, PricewatehouseCoopers (PwC) said Monday.
The study was conducted by the Indian subsidiary of the UK-based global professional services firm, PwC.
“We are seeing a change in the fortunes of the Indian software services and products due to emerging technologies such as social media, mobility, analytics and cloud (SMAC) driving growth and helping it to move to the next level,” PwC India technology leader Sanjay Dhawan said.
With Indian software export firms posting combined revenue of $7.97 billion in 2012, India ranks fifth among the 100 emerging markets on revenue basis.
“As the Indian IT industry has been primarily identified with software services, the focus had relegated its software products segment. Of late, however, we have noticed a significant growth in this segment too as it moves up the value chain,” Dhawan pointed out, citing the study.
Noticing that emerging markets would play a pivotal role in the global software industry, the study found the Indian software industry focusing on innovation, growing talent pool and government support to consolidate its market share in the segment.
“Software-as-a-Service (SaaS) is gaining traction due to shift in business models. In place of perpetual licence revenue, subscription revenue is projected to grow faster at 17.5 percent compounded annual rate and will account for 24 percent of total software revenue by 2016 as against 4.9 percent in 2011,” Dhawan observed.
The number of Indian software product firms have zoomed to a whopping 2,400 in 2013 (first quarter) from a mere 100 in 2000.
“With the adoption of intuitive cloud services, mobile devices and low-cost apps (applications), chief information officers (CIOs) are no longer the decision-makers in the software purchase process. The end users have to be satisfied to retain and grow enterprise sales,” Dhawan asserted.
The survey, however, cautioned vendors of new challenges due to transition to SaaS (software as a service) from traditional licensed software and shift towards hybrid business models.
“Vendors will have to identify and adopt new business models while trying to maintain revenues and profits during times, when the overall industry pricing is under pressure,” Dhawan noted.
With the rise in IT consumers via low and no cost online platforms, software vendors are struggling to explain the difference in value between a low-cost mobile apps and a full-strength, licensed enterprise software package.
“Cloud computing has enabled SaaS to grow as a new business model. We expect business models to range from traditional licensing to SaaS subscriptions only for a short-term. Over time, we will see range of services and functions such as Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS) and Anything-as-a-Service (XaaS) emerging,” PwC’s global software leader Mark McCaffrey said.
According to PwC’s recent Future of Software Pricing Excellence report series, SaaS revenue accounted for about 40 percent of the software revenue for top 10 vendors on the Global 100 list.
“Industry consolidation and increasing globalisation are transforming the software sector. Acquisitions are viewed as R&D strategy and key to acquiring talent and building efficient SaaS capabilities,” Dhawan added.
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