Research firm Gartner estimates India's enterprise software market to grow by a CAGR of 12.3% by 2014. By 2014, India's share of the software market in Asia/Pacific is expected to reach 12%, representing ~US $ 4 billion in revenue or 1.3% of total worldwide software market revenue of US $ 299 billion.

Compared with other saturated/matured countries in the Asia/Pacific region such as Australia (with 21% share of regional spending in 2010), the software market in India is still young and evolving. The increasing globalization of Indian economy has led to growing need for modern software with latest features and improved functionality. Software vendors have strong growth potential in India, but the market is still at its developing stage. Indian enterprises have historically preferred to develop applications using their own labor because it costs less.

However, this tendency has resulted in legacy and quickly obsolete software as well as inhibiting Indian enterprises' sustainability and business IT continuity. Growth will mainly be driven by replacing immature infrastructure with standardized systems and the large vendors stand to benefit.

Rise in spending also reflects confidence in India's economic performance, and stresses the need to adopt better technology to compete in a tougher global environment. Priority areas of software spending include enterprise resource planning (ERP), office suites, operating systems and database management systems. In next five years, fastest growing segment will be Enterprise Content management (30%), Virtualization (27.7%) and web conferencing and team collaboration (26.2%)