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India is set to outpace China in enterprise application software spending growth with a 19.8% rise this year, compared with 18.9% in China, says a report by Gartner.

However, it is to be noted that in absolute terms the total spending in India is projected to reach $2.5 billion, while that of China is expected to be higher at $5.1 billion, said the Gartner report.

The report further said that, India has a higher percentage of companies in all categories who want to increase spending across all enterprise applications.

Enterprise content management (ECM), business intelligence (BI), customer relationship management (CRM) and open source (enterprise edition) were the most popular in India, while open source, ECM and CRM were the most popular in China.

In India, increased software spending is being strongly influenced by overarching digital transformation, followed by mobile and artificial intelligence (AI). In China, cloud/SaaS offerings lead as the top influencer (chosen by 63 percent of respondents), followed by Internet of Things and mobile.

IoT is particularly significant in China due to the large manufacturing base, and the fact that “smart manufacturing” is an official initiative in the country’s 13th Five-Year Plan. However, adoption of emerging initiatives such as IoT, AI and digital transformation will largely vary. Some end-user organizations are still piloting, experimenting with and trialing their own resources in order to implement these initiatives.

“China’s and India’s enterprise application software spending has grown at double-digit rates historically, and they will continue to be hot spots,” said Keith Guttridge, research director, Garner.

“Despite moderate economic growth, technology and service providers (TSPs) should craft a go-to-market strategy that assumes that China and India will continue to be fast-growth markets in the region and the world,” said Mr. Guttridge. “TSPs can differentiate their offerings by providing ‘hand-holding’ mini-consultations for key initiatives, such as IoT (especially in China), AI and digital transformation (especially in India). They can also deliver use-case scenarios that demonstrate the value of products and services to these emerging technologies.”

According to Statista, the revenue of the Indian software market reached around US$5.2 billion in 2016. Until 2018, it is expected to increase to nearly 5.8 billion U.S. dollars of annual revenue. Among the global leaders of the enterprise software market are Microsoft, Oracle, and IBM.

Speaking about Startups in enterprise software sector, enterprise software start-ups are fast becoming the favourites of investors. Take Freshdesk, one of India’s most valuable enterprise start-ups, which makes customer management software. Started in 2010, it has so far raised over $90 million in venture funding from the likes of Tiger Global, Google Capital and Accel Partners.

Between January and April 2016, there were 44 investments in enterprise or business-to-business (B2B) startups, as against 71 deals in the same period of year 2017, according to IndianWeb2 calculations based on data available on the website Trak.in.

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