India's overall software market is forecast to grow at 3.8 per cent year-on-year in 2020 as enterprises relook at their IT spends amid the COVID-19 pandemic, research firm IDC said on Friday.
The software market in the country is expected to grow at compound annual growth rate (CAGR) of 7.6 per cent during 2019-2024, IDC said in a statement.
"There is a significant decline in the overall software market because of the COVID-19 pandemic which is forcing enterprises to relook at their IT spends,” it noted.
Enterprises at this point are focusing on operational resiliency, return on investment (RoI), business continuity plans, and parking aside all non-critical projects for the next three to six months at least, it added.
However, there has been an increase in spending on remote work enablement and cloud adoption, IDC said, adding that there will be heightened demand for collaborative applications, application platforms, security software, system and service management software, and content workflow and management applications.
As per IDC's latest Worldwide Semiannual Software Tracker, H219 (July-December), the India software market grew by 16 per cent year-over-year in the second half of 2019 compared to the year-ago period. For 2019, the India software market achieved a revenue of USD 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," IDC India market analyst, enterprise, Mohsin Baig said.
The growth was shaped by demand for cloud application, application modernisation, increasing IT spends by the small and medium-sized business segment, cloud-native software start-ups, and government initiative for data localisation," he added.
Applications contributed 61 per cent to the overall market revenues, followed by application development and deployment and systems infrastructure software with shares of 21.6 per cent and 17.4 per cent, respectively, in the second half of 2019, IDC said.
"The ongoing pandemic has pushed many enterprises to implement work-from-home policies for the first time, and this has created a demand for collaborative applications as well as an increase in security threats.
“IDC expects a rise in demand for technologies such as VPN, authentication, endpoint security, encryption, and application security," it said.
In the application platform segment, enterprises have mostly prioritised their spending based on the criticality of applications or processes as the enterprises focus on automation, demanding application agility, and speed to market.
Segments such as robotic process automation and model-driven application platform are expected to witness growth in the spending, it added.