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Market Foresight

Enterprise Application Software Spending is Increasing Rapidly in India and China

Enterprise application software spending in India is projected to reach USD2.5 billion in 2018, a 19.8 percent increase from 2017 which is 0.9 percentage points more than the predicted investment by China at USD 5.1 billion, a 18.9 percent rise from last year, according to a new survey by Gartner. While both countries are poised for continued growth, organizations have different criteria for selecting the vendors they use.

Although transforming to digital business is an important reason to increase software spending, other factors take precedence in the survey results. Respondents suggested practical reasons for increasing software spending in 2018, including increased competition, alignment of IT to business, and rate of technology change. In India, increased competition and availability of skills are other top reasons for increased spending. In China, many end-user organizations are struggling to keep up with fast-growing customer requirements, and must invest in their rapidly expanding customer bases.

In India, increased software spending is being strongly influenced by overarching digital transformation (chosen by 91 percent of respondents), followed by mobile (88 percent) and artificial intelligence (AI 88 percent). In China, cloud/SaaS offerings lead as the top influencer (chosen by 63 percent of respondents), followed by IoT – 62 percent) and mobile (60 percent).

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.

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