With strong multi-faceted growth in FY22, the Indian software product ecosystem is headed towards more value creation as it tries to tap opportunities in new markets worldwide
India’s software product revenues grew 18.7% year-on-year to $13 billion with over 2,000 product companies existing in India, according to Nasscom’s recent strategic review report 2022. While the demand created by Covid-19 pandemic served as a great opportunity to grow, the foundations, scope and momentum have been building up over the years.
“India’s product landscape is unique and interesting. We are seeing legacy companies morphing into product companies. We have an entire investor landscape dedicated to bringing up product companies. We have startups solving real hard problems across industries,” says Ramkumar Narayanan, chair – Nasscom Product Council and vice-president, technology and managing director, VMware.
The growing importance of the product ecosystem is due to the experienced founders, establishment of large-scale system integrators and global capabilities centres over the years and rapidly moving the products to cloud, which has made distribution to anywhere in the world simple. “There are thousands of legacy applications in large enterprises that need modernisation. There is a tendency today among IT services companies to bring in modern SaaS solutions to modernise and integrate it with their services. This is a huge synergy between services and product companies, creating joint go-to-market opportunities,” says Narayanan, talking about the unique trends driving the growth of product companies in India.
In FY22, there were over 43 unicorns coming from India, including 11 IPOs. Looking at the current scenario one can expect 100s of unicorns from India in the next few years, which was once a dream for the ecosystem. “However, internally in Nasscom the conversations today are on how we can move and focus more on revenue. Real opportunities will get unlocked when the companies roll in revenue proving the worldwide adoption of their products,” says Narayanan. “We are also focused on their customers’ growth, their reviews and experience.”
According to him, there are a range of Indian deep-tech startups today which solve real tough problems that the world is willing to pay for—from space, biotech to EV s and quantum tech. In the new economy, data is valued highly but it correlates to the valuations of business-to-consumer (B2C) startups more than that of business-to-business (B2B) ones. “Around 40-50% of the companies we see today scaling up are B2B. Data is very important to them, however, the problems they are solving are hard STEM (science, technology, engineering, and mathematics) intensive problems and that will bring real value and revenue. We will see more of them in the coming years,” says Narayanan.
Nasscom has been working with the government to drive the agenda of opening new market opportunities worldwide. “We have events where we help companies meet matches in the global market to grow. We have a target of enabling 1000 deep-tech startups out of India by 2025. We have touched about 150 till now. There are over 80 mentors from around the world, with great experience and connections in world markets,” says Narayanan. This is primarily done to solve the biggest challenge prevalent today for the Indian startups, which is market access.
According to Narayanan, North America continues to be the biggest market for the startups while momentum in Europe and Asian markets are fast building up. “This is a continuous problem as the markets are large and there is also global competition. We want to provide a strong ground for our startups.”