Will the Indian software industry see strong revenue growth in 2020?

The IT industry and the associated sectors have been major contributors in fuelling the Indian economy for the past many years. According to a report, the Indian software industry brought in a revenue of over $800 Million in 2019 and this figure is estimated to increase further in the year 2020. From SaaS (Software as a Service) to ITES (Information Technology Enabled Services) and IT exports, each aspect has seen growth and continues to do so. The IT industry has been instrumental in creating a name for India around the world. As an offering from a growing economy in the world, the industry is all set to design and offer superlative IT products and services to companies in India and beyond.

In the following lines, let us take a look at what factors make India one of the leaders in the software industry and how it looks going forward.

Factors which can increase the revenue in the software industry

  • Make in India - This initiative from the government of India has played a significant role in improving the entrepreneurs’ ability to build and showcase their products and ideas to the local as well as global audience in a more viable manner. The government has taken all steps to ensure entrepreneurs have access to all facilities, skills and policies to build their products and ideas in India. Started in September 2014, this movement has changed the way a new business is perceived by investors from around the world. It is encouraging innovative solutions and helping entrepreneurs develop the necessary skills that help in projecting their products/services in the right manner. This initiative also promotes transparency in every aspect of the business development and has created trust among the investors in a healthy environment for both the enterprises and the investors. The results of this initiative are projected to grow and yield higher revenues to all industries in India along with the software industry, which is at the forefront. .

  • Social Media - Over the years, the one thing that has brought people and businesses together is social media. Platforms such as Facebook, YouTube, Instagram, Tumblr, etc. are used extensively to exchange ideas. The rise of such online tools is being capitalized by businesses and rightfully so. They can let their prospective customers know about their solutions in an accessible and widespread platform and even create a community of like-minded people for increasing the visibility of their enterprise. The usage of this medium by Indian software companies has been rising over the years and they have successfully tapped into it to promote their offerings both in the domestic as well as international markets. Social media has become an important tool that allows them to put forth their business ideas in front of a larger audience and make them more visible from a competition perspective. The increased usage and awareness are expected to result in higher revenues.

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  • Enterprise Mobility & ECommerce - Enterprise mobility refers to a flexible work system that encourages employees to give their best since they can work in a location that they are comfortable in. This has proven to improve productivity along with savings. Work updates are shared on a real time basis using cloud computing, and this saves time and effort. Whether it is video conferencing or other enterprise mobility tools, this business model is proving to be ideal for the software technology parks of India. The infrastructure in India has been improving and is currently perfect to be utilized by companies offering this convenience to their employees for increased revenues. With the roll out of the 5G internet services soon, it is believed to offer even more flexibility in connectivity services to everyone. This will in turn fuel the growing eCommerce industry. The growing usage of smartphones by the population is offering newer avenues for business growth in the eCommerce space that is bound to result in higher revenues..

  • Business Analytics - Studying data that is available in lieu of statistics and operational processes is important for identifying the best practices for a particular business model. This process of analyzing varied processes is known as business analytics. Mixing data and analytics has been helping in defining specific market strategies. Based on sector research and sector analysis, enterprises are able to determine the basis for increasing their spatial revenue, and returns as a whole. Tools such as Big Data are resulting in creating a more connected database that allows businesses to identify patterns helpful for their growth. Being an emerging market, Indian entrepreneurs have a lot to seek in terms of data such as customer behavior, effectiveness of business analytics tools and a foolproof strategy based on statistics. The cost for accessing such data is also low and the returns, high. Investors are encouraging Indian businesses to base their models on such analytics so as to create a competitive enterprise and more companies are relying on them for better prospects. Business based on Big Data are having higher success rates resulting in increased ROI.

  • Cloud for Businesses - Every business looks forward to cutting their operational costs to increase their profits. Until a few years ago, the cost of setting up an establishment meant infrastructure expenses and spending money on resources such as equipment, setup, etc. In recent times, cloud computing has led to lower infrastructure expenses. Most of the cloud service providers are offering a monthly/quarterly/yearly subscription based on the requirements of the particular establishment. When compared to the former, these are quite lower. The IT industry is reaping the benefits of this technology and saving a lot of expenditure on infrastructure costs. Along with the savings, they are also benefiting from real-time access and a competitive edge over others in the market. They are able to roll out products and services to prospective customers at a faster pace, and increasing the revenues in terms of saved time, expenditure and efforts. The higher utilization of cloud services is expected to increase the profits of companies resulting in higher investments.

  • Weak Currency Valuation - With the Indian rupee continuing its weak performance against the US Dollar, it has become cheaper to export goods to other countries. The Indian software industry is able to be competitive in the industry by offering a higher value proposition to the overseas clients partly due to the weak rupee valuation against the US Dollar. Since a major part of its revenue comes from overseas business (export of IT services), it is resulting in increased revenues.

All the above factors and the fact that Indian economy is growing faster than many other economies in the world leads to a considerable rise in the valuations of the Indian equity stocks. Overall, the software sector report indicates that with the best use of the available resources, the said market can foresee a strong revenue growth in 2020.

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