……Snippets from Software Products Chapter of NASSCOM IT-BPM Strategic Review FY2017. Download the full report here
Global Software Products – 2016
The year of 2016 was a landmark year, due to the vivid changes in the political, economic, and business landscape. UK’s exit from the EU, the Trump Presidency, demonetisation in India, and several incidents of cyber-attacks had made the year for what it was. From a technology standpoint, these changes, along with the other market developments are paving way for Industry 4.0, digitisation (SMAC), cost efficiencies, cyber security, intelligence and the rise of SMEs/start-ups – and the software product industry is right in the middle of this.
As per IDC, the global industry was valued at USD 413 billion in 2016, with a 6.4% Y-o-Y growth. On-premise continued to be the largest segment but public cloud experienced higher growth (7.6X the growth of on-premise).
Important would be to note the 4 key aspects becoming significant in enterprises, which is increasing the adoption of new generation enterprise software products worldwide:
Product Industry in India – FY2017
The India market does mimic the technology trends of the global landscape. The industry is expected to garner a revenue of USD 7 billion in FY 2017, a 9.5% YoY growth. Of this, exports, which contribute 1/3rd to the market, is expected to grow by 7.8%, while the domestic market is expected to have a higher growth of 10.4%.
Let us have a quick look at the top trends of the year:
1. Indian product companies rising and shinning globally: In the global markets, Indian product companies are breaking through customers’ proclivity towards global software giants, by offering low-cost, value-added and agile technologies. Products such as CRM, contact center software, retail banking, and revenue management are already being featured in the Gartner’s magic quadrant, highlighting that Indian companies are coming at par with global players.
2. Asia-Pacific and Middle-East becomes lucrative export destination: While the US continues to be the major market, there is a growing demand for Indian software products in countries such as Singapore, Malaysia, Hong Kong, Indonesia, Philippines, UAE, Bahrain, Dubai, and the list goes on. The ability of Indian product companies to provide both end-to-end and point solutions, whether on-premise or on cloud – makes them attractive in the Asian and Middle-East markets.
3. The domestic market sees higher growth – with new breeds of customers emerging: Driven by the changing environment both globally and in India, the domestic market is witnessing a higher growth (10.4% YoY, 2.8 times the growth in FY 2016). Within the domestic markets, though larger enterprises constitute the major customer base, newer customer types comprising the Government, PSUs, SMBs, and Banks/Payment Banks are gradually increasing their software consumption. The key drivers for this would be the phenomenal digital drive by the government, and the rise of new age tech product companies, providing software that can cater well to the rising mid-market segment.
4. Opportunity Segments –SaaS, FinTech, and Cyber Security have been some of the prominent segments of the year. SaaS, driven by virtualization/cloud adoption; FinTech driven by the movement towards cashless economy, and the global demand for Indian banking solutions; cyber security, driven by rising digitisation and the subsequent rise in security breaches. The year saw newer product types, newer concepts, and a movement towards smart, agile technologies.
5. Redefining year for the product start-ups: In the whole product ecosystem, start-ups continue to play an important role, offering innovative solutions around analytics, artificial intelligence, robotics, and cloud technologies. The year of 2016 had been a defining year, with utmost focus on business effectiveness, sustainability, and technological prowess, and is believed to have laid a more mature and solid foundation for the upcoming years. With 4750+ start-ups in India, the community is significantly contributing to innovation, product differentiation, and rise in the talent pool, and most important of all, contributing to the ‘By India, For India, and Of India’ Movement.
Well, in this blog, we barely scratched the tip of the iceberg. To get in-depth insights on market developments, key strategies employed by top players, industry benchmarks, outlook, and compare software products with other segments such as IT services, BPM, and eCommerce, download your copy of NASSCOM’s flagship report The IT-BPM Sector in India: Strategic Review 2017.