India software revenue to touch $5.8 billion in 2017: Gartner

The computer software and hardware vertical had a FDI inflow of $5.9 billion during the period from April 2015 to March 2016

India software revenue is forecast to total $5.8 billion in 2017, a 12.8% increase from 2016 estimates of $5.2 billion, according to Gartner, Inc. 

This is in comparison to Gartner's forecast for 2017 global spending for enterprise software will be $357 billion in constant US dollars, with growth of 7.2% over 2016.

On Wednesday, Software industry lobby National Association of Software and Services Companies (Nasscom) also revised the information technology (IT) sector’s growth forecast downwards to 8-10% this year, as its biggest members such as Tata Consultancy Services, Wipro, Cognizant and Infosys struggle to grow faster because of an uncertain environment.

“Emerging digital business strategies are changing enterprise organizations' buying behaviors in India and accelerating the demand for technology innovations and outcome-based solutions”, said Bhavish Sood, research director at Gartner. “New ways of monetizing the value being delivered, such as revenue-sharing models, are also evolving.”

The computer software and hardware vertical had a foreign direct investment (FDI) inflow of $5.9 billion during the period from April 2015 to March 2016. This is an increase of nearly 150%, compared to the same period last year. Gartner report said that it expects these investments to gather further momentum toward the end of 2016. “Make in India” is set to boost the manufacturing sector, as well as make it easier to attract investment, and “Digital India” is focused on creating digital infrastructure, digital delivery of services and increased digital literacy. 

Infrastructure software spending in India is projected to surpass $3.4 billion in 2017, a 10.2% increase from 2016. Enterprise application software spending is forecast to grow 16.8% in 2017.

“Indian CEOs want IT to move from the back-office to driving revenue. Aggressive digital business strategies are putting pressure on CIOs to have a direct impact in business outcomes like growth, customer experience and profitability. CIOs are being asked to increase the business value that IT is able to deliver, and equally important, to quantify it,” said Sood. 

Indian firms have witnessed growth from clients in newer areas such as adoption of automation, cloud and digital technologies, but this has not been able to offset the drastic dip in volume in traditional IT services.  

At the same time, customers are also asking for massive price cuts, expecting the Indian firms pass on benefits from productivity improvement and automation than retaining themselves. 

India’s IT industry would also face challenges if US President-Elect Donald Trump implements his stricter immigration norms, pushing firms to hire more people locally to serve clients there. Such a move will put pressure on their margins.