The International Data Corporation (IDC) Worldwide Semiannual Software Tracker 2024 H2 (July – December) has revealed that AI, cloud, and transformation will drive the growth of the software market in India.
The report revealed that demand for cost-effective, scalable, and cloud-based software solutions in India remains strong, driven by the country's robust economic growth and a thriving startup and SME ecosystem.
Moreover, the government's proactive initiatives to promote indigenous software development and the adoption of emerging technologies such as AI, cloud computing, and IoT are providing a strong impetus to companies.
"AI remains the buzzword, whether it's GenAI, Agentic AI, or plain old AI/ML, as Indian enterprises accelerate adoption across their ecosystems," said Hemanth Gudiwada, research analyst, IDC India. "As organisations step up their AI journey, they continue to build, secure, and strengthen their core IT systems – ranging from databases and networks to ERP and CRM platforms – to align with data residency and protection regulations.
Growth projections
According to the report, India's software market is projected to reach US$18.4 billion by the end of calendar year 2025. The market is expected to reflect a 21.9% year-over-year (YoY) growth from 2023 and increase from US$15.2 billion in 2024. This growth trajectory, with a compound annual growth rate (CAGR) of 18.8%, potentially reaching US$35.9 billion during the 2025–2029 forecast period, paints a promising picture for the future of India's software market.
Market challenges
Despite expected growth, IDC noted that Indian organisations still heavily rely on legacy systems, with high costs and specialised talent associated with modernisation. A skills gap remains in AI, cybersecurity, and cloud.
Moreover, budget constraints and uneven digital infrastructure between Tier 1 and Tier 2/3 cities hinder market growth across the country.
