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- Microsoft, Oracle, and SAP continue to command leading positions in the software landscape.
- Many Indian organisations are still dependent on legacy IT systems, which are costly and complex to modernise.
India’s software industry is anticipated to climb to $18.4 billion by the end of 2025, compared to $15.2 billion in 2024, reflecting a robust 21.9 per cent year-over-year increase from 2023, according to new projections from the International Data Corporation (IDC).
India now represents just over a fifth—20.5 per cent—of the Asia/Pacific software market (excluding Japan and China). Industry giants Microsoft, Oracle, and SAP continue to command leading positions in the Indian software landscape during this surge, underscoring their strong foothold.
IDC’s estimates further suggest a powerful outlook for India’s software market, which is expected to maintain an impressive compound annual growth rate (CAGR) of 18.8 per cent and possibly reach $35.9 billion in the 2025–2029 span.
Diving deeper, IDC segments the software industry into three core areas: applications, application development and deployment (AD&D), and systems infrastructure (SI) software.
These areas are forecasted to expand at CAGR rates of 15 per cent, 31.2 per cent, and 13.2 per cent, respectively, over the next several years.
AI: Biggest growth engine
Currently, the largest software revenue streams in India stem from engineering, collaborative, customer relationship management (CRM), enterprise resource management (ERM), and content workflow applications.
Notably, the Artificial Intelligence sector stands out as the biggest growth engine, with nearly 91 per cent year-over-year growth in 2024. Collaborative software and endpoint management categories are also gaining significant traction, both registering growth rates well above 29 per cent.
Several factors are fueling this growth. India’s strong economic momentum, a vibrant startup and SME landscape, and government efforts to champion indigenous software and new technologies are all playing key roles.
Companies across sectors are increasingly adopting cloud, AI, and IoT-powered digital solutions, and there’s rising interest in industry-specific software for healthcare, education, and logistics.
Disparities in digital infrastructure
Nevertheless, the surge comes with challenges. Many Indian organisations are still dependent on legacy IT systems, which are costly and complex to modernise.
Demand for specialists in AI, cybersecurity, and advanced cloud technologies continues to surpass what the current workforce can offer, prompting the government and tech giants to invest in reskilling initiatives.
Smaller businesses remain cautious due to budget constraints, often limiting their software spending to essentials. Furthermore, disparities in digital infrastructure between major urban centers and smaller cities are slowing nationwide adoption rates.
“AI is the catchphrase of the day – whether it’s GenAI, Agentic AI, or classic machine learning,” notes Hemanth Gudiwada, IDC India research analyst.
“As Indian enterprises increasingly embrace AI, they are also reinforcing their foundational IT systems to comply with local data regulations and business needs. With a patchwork of legacy, hybrid, and multi-cloud environments, organisations are actively seeking flexible, robust software. Success for providers will hinge on building strong local partnerships and delivery capabilities to meet these evolving requirements.”
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