Spending on enterprise application software by Indian companies is forecast to total $4.7 billion in 2022, an increase of 14.8% from 2021, according to analyst firm Gartner. However, the growth in overall software spending will be lower in 2022 than in 2021 owing to a volatile global macroeconomic situation that has increased business uncertainty.
Enterprise application software includes analytics platforms, collaboration software, customer experience and relationship management (CRM), Office suites, supply chain management (SCM) and enterprise resource planning (ERP) software, to name a few.
“Driven by the digital transformation agenda, Indian enterprises will continue to expand the share of software spending in their broader IT spending. Organisations are increasingly relying on software to operate all aspects of business,” said Neha Gupta, vice president analyst at Gartner. However, Gupta noted, “The volatile global macroeconomic situation has increased business uncertainty.”
According to her, organisations will continue to put “new long-term projects on hold selectively and cut the scope of high-cost projects” and instead look to “quick win” projects that either have a shorter return on investment (ROI) or provide a competitive edge.
Applications critical for maintaining the quality of customer service, like SCM and CRM will see increased spending as organisations look to address complex supply chains and volatile marketplaces, and more effectively adapt to change and disruption.
For example, spending on CRM software is forecast to grow over 18% in 2022, while SCM software spending will increase over 10%. Likewise, core financial and planning tools will see increased spending as companies look to improve their ability to manage cash and ensure a firm financial foundation upon which to grow, said the analyst firm.
Indian businesses will also increase spending on email and authoring and content services to continue to support collaboration and remote and hybrid work, said Gartner. A large portion of pandemic-related spending in these two markets occurred in 2020, causing a large peak that, while still growing, has slowed spending for the next few years, it said.
In a report published in August 2022, research firm Statista said that the software spending by enterprises in India is forecasted to be around $10.5 billion in 2022. The research firm too attributes this increase in spending compared to the last two years to the impact of the global pandemic which accelerated the process of digitalisation for many companies soon after.