Country's software product revenues estimated at only $6.1 bn in FY15
Despite having the “fastest growing” and “third largest” software product start-up system in the world, India remains far behind America and Britain when it comes to this technology segment. According to industry body Nassom’s Strategic Review for FY15, for a segment that saw worldwide spending of $420 billion in 2014, India’s software product revenues are estimated at only $6.1 billion in FY15.
Nasscom has estimated a growth of 12 per cent in the Indian software product sector in FY15, nearly the same that has been pegged for the information-technology (IT) services sector, despite the former’s low base as against the $146 billion (domestic and export revenue) estimate for IT services during the year.
Budget 2015: Complete Coverage
Even within this small segment, start-ups are only five to 10 per cent of total revenues, dominated by multinational companies that account for 40-45 per cent of the segment, Nasscom said. Product-cum-services companies make for 20-25 per cent of the segment. According to Nasscom, 91 per cent of software product exports across the world are from the US and Europe.
“The product ecosystem is maturing rapidly, with over 4,000 product firms — an eclectic mix of multinatinal corporations, large integrated firms, mid-sized pure play product firms and emerging start-ups,” Nasscom said in its Strategic Review for 2015. “In terms of revenue size, the industry is fairly concentrated, with the top 11 players (aggregated across all segments, origins and engagement models) accounting for around 30 per cent.”
While Indian entrepreneurs have been working to build ‘world class’ products, Nasscom said, the domestic market is the mainstay for the software product segment, unlike other ones where exports are stronger. Of the $6.1 billion revenue estimated for FY15, Nasscom expects domestic revenue to be $4.2 billion and exports to touch $1.9 billion.
Budget 2015: Complete Coverage
In an earlier report, Nasscom had said India had the third largest base of software product start-ups in the world. It estimates India has close to 3,100 start-ups, with a little over 800 new ones every year. Nasscom estimates India to have 11,500 start-ups by 2020, employing 250,000 persons.
Banking, financial services and insurance have been the front-runners in consumption of software products, Nasscom said.
“The Indian software product segment has gained significant domain knowledge and talent expertise over the years, with key skills in demand, including core technology and product management, along with sales and marketing activities due to growing focus on global customer markets,” Nasscom said. “With the increasing number of senior industry professionals moving into this segment, either in established firms or as entrepreneurs, the Indian product industry has greatly benefited from this heterogeneous talent pool.”
Budget 2015: Complete Coverage
Poor start?
- $240 billion: Worldwide spending that the software product start-up system saw in 2014
- $6.1 billion: India’s software product revenues in FY15
- 12%: Estimated growth in the Indian software product sector in FY15
- 91%: Percentage of software product exports across the world from the US and Europe
