The smaller component of the Indian IT industry - software product firms - are now witnessing accelerating growth according to Nasscom data.
Revenue from the software product segment touched $2.2 billion in FY13, with exports accounting for $1.6 billion revealing a CAGR of 9 per cent over FY08.
According to Nasscom senior vice-president Sangeeta Gupta, who spoke to The Financial Express on the opening day of its annual software product conclave, the growth of software product companies was not limited to just tier-1 cities, as many such firms were emerging from tier-2 and -3 locations.
She added, that software product companies were now able to reach a revenue of Rs5 crore in just about four years, as against the 10 years earlier.
The over $108-billion Indian IT industry boasts over 3,000 companies in the software product space with 500 additions to the number every year.
According to Nasscom, the Indian product landscape had seen improving capabilities with provision of dedicated sales/pre-sales teams with bundled offerings to customers - and was thus getting international recognition for its contribution on a global platform.
The growing domestic market along with new investment avenues like private equity / venture capital, incubation centres, and angel funding, were driving the growth of Indian IT product firms.
According to Nasscom, the growth of the sector was driven by various factors including an increase in mobility devices, online transactions and newer technologies with lower operating costs.
According to Som Mittal, Nasscom president, the growth was also driven by rapid technology adoption across segments of the industry with consumers, enterprises, SMBs and the government now looking at e-solutions for businesses and processes.
According to Nasscom this was creating opportunities for software product developers, operating in various verticals.
Gupta said with the growth of the product eco-system there was a lot of potential in the startup business and the number of angel investors in the country had risen from seven in 2007 to around 32 this year.
The IT-BPM Industry continued to build strong interest from the VC/PE community with software, internet and mobile industries accounting for 65 per cent of total VC investments in India, Nasscom said.
The transaction value of Venture Capital/PE (Private Equity) deals in software products space since 2008 amounted to a total of $711 million, Nasscom added.