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India, today, is at a crucial juncture. During the
last decade, the country’s IT and software sector has grown from $118 billion
to a projected $283 billion in FY 2024-25. Within this, the export revenues
account for approximately $224 billion in FY 2022-25. However, there is still a
deeper, largely untapped potential waiting to be realized. The country can
leverage the domestic market, underserved niches, and the structural advantages
that homegrown companies possess over global giants in delivering for Indian
contexts.
First, Indian companies have an edge when it comes to
understanding local pain points and gaps. Starting from regulatory compliance
to regional language interfaces, along with rural connectivity constraints,
there are many areas where global giants struggle to internalize Indian
nuances. On the other hand, indigenous firms are closer to the ground, and they
can innovate quickly. This proximity translates into better adoption, higher
retention, and greater scope for innovation.
Second, the domestic software opportunity is huge.
Historically, the Indian IT industry has focused more on exports. In financial
year 2023-24, India’s software services exports, including those via
affiliates, touched $205.2 billion; export estimates differ across sources
depending on definitions. In contrast, the domestic market remains underpenetrated.
As India seeks to digitize its more than tens of millions of MSMEs, modernize
municipal services, and bring computational power to tier-II and tier-III
cities, the demand for local software is expected to surge. Here, the local
firms can overtake global giants if they make the right moves at the right
time.
Third, the shift in the global services paradigm is
favouring innovation over arbitrage. India’s software export market has been
evolving for years. Currently, the product development and R&D services
form a larger share. This evolution rewards firms that can build IP, platforms,
and deep domain overlays.
Fourth, changes in global market are sharpening the
advantages of Indian players. Rising wage arbitrage costs, geopolitical
instability, and demands for data sovereignty are making pure offshoring model
challenging to sustain. Indian companies, meanwhile, can stay onshore and
deliver the services without visa bottlenecks or cross-border friction. In
addition, government’s push towards data localization and Digital India makes
the market conditions favourable for local firms. Such is the impact that
global giants like Google are now emphasizing sovereign cloud deployments in
India.
Governments can act as critical launch pads for
indigenous software by adopting and validating them first in public systems,
thus creating turning points for nascent product startups. India’s National
Policy on Software Products (2019) already mandates preferential inclusion of
Indian software products in government procurement. In defence too, the Indian
Air Force recently procured indigenously developed software-based communication
sets from BEL, signalling that mission-critical systems can be domestically
supplied.
Globally, the U.S. DARPA has long funded high-risk, early-stage
technologies (e.g. the Internet, GPS) that later became ubiquitous commercial
platforms. Likewise, India’s DRDO has developed Maya OS, an indigenous
operating system now being rolled out in Defence Ministry computers to reduce
dependence on foreign software. By setting ministries and public agencies as
first adopters, the government provides critical scale, operational validation,
and visibility, lowering risk for private purchasers and accelerating local
startups’ ability to compete.
Having said that, to fully claim this moment,
indigenous players must scale up, invest in research, create strong
partnerships, build robust governance systems, attract global capital, and
manage quality at scale. There is also the opportunity of bridging the trust
gap, as many Indian enterprises still lean towards the big names in the
industry. But as successful domestic platforms demonstrate reliability, that
mindset is shifting.
This is the time where new-age founders,
technologists, and investors must step forward and create new opportunities for
themselves. Parallelly, the existing big local players need to continue
capturing the new markets, opening up field for Indian players to expand their
businesses. The next wave of software growth is going to come from innovation
and not from rewriting what works elsewhere. This is why it is important to
build what works here. As Managing Director of Eazy Business Solutions, I see
every day how this local insight and agility unlocks value that global players
struggle to capture, and I believe that India’s software companies are poised
not just to ride the wave, but to define it.
