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Stakeholders identified: Mr Som Mittal (left), President, Nasscom, and Mr Ganesh Natarajan, Chairman, at the Nasscom product conclave and Expo 2008 in Bangalore on Monday.

Our Bureau

Bangalore, Aug. 11 Indian software product companies would have aggregate annual revenue between $9.5 billion and $12 billion by 2015, compared with $1.4 billion in 2008, according to a report published by Nasscom on Monday.

The report, Nasscom Software Product Study: Outlook for Indian Software Product Businesses, aims to define a roadmap on the market opportunities and key recommendations to help India emerge as a “product” country.

According to the report, the next decade will play a crucial role in bringing about disruptive growth for the Indian software product business.

Enterprise application software would present the largest opportunity, with business intelligence, enterprise risk management, storage and security being the key priorities.

“The product segment in India has the potential to grow 10 times its current size and touch anything between $9.5 billion and $12 billion over the next decade. We have a lot of work to do and have identified all the stakeholders who can make this happen,” Mr Som Mittal, President, Nasscom, said.

India’s R&D offshoring experience, software product talent landscape, the high innovation–low-cost advantage, domestic market potential, changing VC environment and support ecosystem would help the software product companies, Nasscom said.

The report said there are 38 incubation centres in India that assist technology start-ups with funding and mentorship. Funds invested in the software products segment have grown to $156 million in 2007 from $76 million in 2005. Total VC investment in India has grown to $543 million in 2007, the report said.

The report also said that of the existing 371 software product start-ups since 2001, over two-thirds have been formed in the past three years, and about 100 companies have started their operations in 2007.

As a result, while the top 10 companies still dominate, accounting for 84 per cent of the segment revenue, there are over 200 mid-sized companies and start-ups that have started contributing, the report said.

Mr Pari Natarajan, CEO, Zinnov Management Consulting Pvt Ltd, said share of revenues from the domestic market for the product companies would increase to an average of 41 per cent by 2015, from 32 per cent in 2008, to reach between $4 billion and $5 billion.

Proximity of the Indian companies to the local market, good understanding on localisation requirements and ease of adopting customised and targeted sales approach would fuel this growth, he said. At present, the Indian software product business is export-oriented, the CEO added.

Mr Subash Menon, Chair, Nasscom Product Initiative and Founder Chairman, MD & CEO, Subex Ltd, said the industry seems to be spawning product start-ups at an amazing speed. This much-needed momentum would fuel a mass movement in the products business in India, he added.

The report said over the past 3 years, the annual revenue aggregate of Indian software product businesses has grown at a compounded annual growth rate of 44 per cent.

Leading Indian software product firms have strengthened their product portfolio through steady investments in organic growth as well as through overseas acquisitions and have reached credible business scale.

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