PwC's global software leaders rankings underlines India's miniscule presence at the bottom of the pile

24th May 2013
PwC's global software leaders rankings  underlines India's  miniscule presence at  the bottom of the pile

We're all service, hardly any original software...that's the real message.
Bangalore, May 23, 2013: The Indian companies in the top 100 emerging markets list bring combined revenue of 797 million USD. India ranks fifth among the emerging markets based on revenues. The findings are part of PwC’s Global 100 Software Leaders report, a revenue based study on the world’s top 100 software vendors.

The report also contains indices of the top 100 software vendors in North America, Europe Middle East and Africa (EMEA) and the emerging markets.

Says Sanjay Dhawan, Leader, Technology, PwC India: “The Indian IT industry has been primarily identified with software services and this focus has relegated the software products segment to the background. However, off late, we are seeing a change in the fortunes of this segment due to significant growth. Emerging technologies such as Social media, Mobility, Analytics and Cloud (SMAC) are driving the growth in this segment and helping it move to the next level.”

A number of software product firms have grown over the last decade from a little over 100 in 2000 to nearly 2400 in 2013. According to the industry body NASSCOM, the revenue from the software product segment currently stands at 2.2 billion USD and is expected to reach 10 billion USD by 2020. 

IndiaTechOnline analysis:
When India’s software leaders are judged on a global scale -- they are pygmies: The Global 100 from No 1 Microsoft with $ 57 billion in 2011 software revenues to ACI at no 100 with with $ 338 million, does not include a single India-based entity.
One has to drill down to the Emerging markets list to find the first Indian entity – not the Usual Suspects but Geodesic at no 14 with revenues of $164.97. Infosys is no 27 with $ 81.5m and TCS is no 28 with $ 80.3m… which just underlines that the India IT story is still all IT services not software development. Even among emerging markets, a Brazilian company, Totvs heads the list with revenues of $631.7 m, which again will come as a damper for India’s macho stance as an IT power.
The lesson is there in the numbers: we are great at the less creative aspects of business processes and IT-enabled services. When it comes to original software – the innovative part of the IT spectrum, we are an 'also ran'. 


The findings from the research show that some key forces are causing deep structural changes in the industry, fundamentally reshaping how software companies do business:

• Software-as-a-Service is gaining traction: Although SaaS represented only 4.9% of the total software revenues in 2011; there is a consistent and significant shift towards SaaS. Perpetual licence revenue has been shrinking since 2004 while subscription revenue (including SaaS) is forecast to grow at a 17.5% compounded annual rate, amounting to 24% of total software revenue by 2016.

• Customer is king: With the adoption of intuitive cloud services, mobile devices and low-cost apps, Chief Information Officers (CIOs) are no longer the sole decision makers in the software purchase process. The end users must be satisfied in order to retain and grow enterprise sales.

• Emerging hybrid models bring new challenges: There will be a range of business models from traditional licensed software to pure SaaS and hybrid approaches, which will pose challenges for the vendors in the future. Vendors will need to identify and adopt new business models while trying to maintain revenues and profits during times, when the overall industry pricing is under pressure.

• Priority on pricing: Pricing is paramount to the entire sector. With the rise in IT consumers via low and no cost online platforms, the software companies are already

Adds Mark McCaffrey, PwC's Global Software Leader: “Cloud computing has enabled SaaS to grow as a new business model. We expect the business models to continue to range from traditional licensing to SaaS subscriptions only for a short-term. Over time, we will see that a growing range of services and functions such as Platform-as-a-Service, Infrastructure-as-a-Service and Anything-as-a-Service (XaaS) will begin to emerge.”

According to PwC’s recent Future of Software Pricing Excellence report series, the top four companies surveyed earned less than 2% of the revenue generated from SaaS in 2011 while data from the top 100 companies indicates considerable movement. The SaaS revenue accounted for at least 40% of the software revenue for 10 companies on the Global 100 list. Industry consolidation and increasing globalisation are also transforming the software sector. Acquisitions are viewed as R&D strategy and key to acquiring talent and building effective and efficient SaaS capabilities.

Read the 44 page full report: