By Kunal Singhal
Mumbai- 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.

MENAFN29102025000215011059ID1110266872