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 Denise Holland India Cloud Computing Market Poised For Big Growth

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 By Denise Holland

Forecasting Clouds in India

Research firm Zinnov has released an estimate that the cloud computing market within India is expected to reach $1.08 billion by 2015. This would be a ten-fold increase from today's estimated $110 million market. Software as a Service (SaaS) is expected to make up $650 million of that revenue, with Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) solutions making up the rest. "This is indeed a perfect storm. The only difference is that, this storm is destructive only to companies which are not willing to change, while it is a huge opportunity for others," says Pari Natarajan, CEO of Zinnov.

With close to 8 million Small and medium businesses (SMBs) in India, this market segment presents a huge opportunity for SaaS vendors and solution providers. Since this model of delivering software remote over the Internet offers key benefits such as reduced up front investments, faster time to market, reduced implementation cycles, predictable IT expenditures and the ability to eliminate IT distractions which permits a greater focus on core competencies, it presents a tremendous business opportunity for SMBs.

Small and medium businesses, or companies with up to 999 employees, in India were estimated to spend more than $45 million on hosted business software applications in 2009, according to a prior study by Access Markets International (AMI) Partners. Medium sized businesses, or companies with 100-999 employees, are anticipated to account for over two thirds of the country's total SMB expenditure.

During curtailed economic times India SMBs, which are traditionally a very price-sensitive market, are even more cost conscious than normal. Hosted business software applications require little to no up front financial investment in technology. They also require little allocation of time or resources for software deployment and recurring maintenance. For these reasons hosted applications appear well positioned to compete against licensed on-premise software. Software application vendors who provide packaged business suites, such as Customer Relationship Management (CRM), payroll, HR, enterprise resource planning (ERP) and collaborative applications are expected to outpace traditional software licensing vendors by nearly 800% in India.

The challenging economic environment is also causing India companies to turn to customer relationship management strategies and software systems in order to improve customer retention. The Customer is always right, and even more so in a downturn. That's why customer related activities, especially customer service, becomes so much more important when business is dull and competition is even greater. A customer driven market automatically elevates the need to have a sound CRM system in place.

Pent Up CRM Software Demand

Further exacerbating the demand for software as a service CRM is the pent up demand resulting from stalled or delayed enterprise software purchases during these times of uncertainty.

According to Gerald Prabhu, Executive Director, Strategic Alliance & Marketing, CDC CRM Solutions, "There were many projects, especially in verticals such as capital markets, wealth management and real estate that shunned their projects. We had at least eight such opportunities (in the contract stage) that didn't materialize in 2009."

Rajendra C Mruthyunjayappa, Managing Director-APAC, Talisma informed us that they had also seen many organizations stall their purchasing process and some postponing CRM projects indefinitely or at least until the time when the market bounces back. "Organizations that don't have a CRM system running usually do have some Excel-based or homegrown mechanism to facilitate customer engagements. Hence, many of them chose to stay away and continue with what they had until the time sanity was restored on the economic front," said Mruthyunjayappa.

In a bid to respond to the prevailing market conditions and better sell their CRM products, software vendors adopted different sales strategies over the prior 12 to 18 months. At CDC for example, they positioned a combination of the CRM sales force automation and customer service functionality and built a new core process module called the Collection and Renewals Management System for the insurance industry. Offering wider suites of CRM software systems, as well as industry specific applications, is now being routinely promoted throughout India by vendors such as SAP, Oracle, Microsoft, Sage, Talisma, Amdocs and Impel CRM.

"The idea was to take advantage of the prevailing customer sentiments in the insurance sector where retaining a customer was now more profitable than perhaps acquiring a new one," commented Gerald Prabhu. He added "We positioned the CRM as a sole aggregator of customer information and processes more than as a plain acquisition and retention tool. By positioning it like that we showed customers how other processes can be extended to CRM (thereby avoiding investments in other applications). One such example was the Recruitment and Performance Management application that we had positioned, again for the insurance industry."

Oracle also increased its focus to on-demand CRM in 2009. According to Surya Bhardwaj, Vice President, India Applications, Oracle India, "Our focus was more on capitalizing on the opportunities through the more cost-effective and affordable options such as on-demand CRM. Our strategy is to offer customers the best possible array of solutions based on the demands of the marketplace."

Another leading enterprise software vendor, Sage, also chose to verticalise its CRM solutions in a bid to better cope up with the lean times. Thomas Abraham, Managing Director for Sage India, said, "As a concept, CRM was understood a lot better in 2009 than in the past. The components of CRM, namely, Sales Force Automation, Customer Service, Marketing and analytics are well comprehended, which makes positioning a lot easier. In a bid to improve the appeal of our product we decided to position it according to the specific needs of some of the key verticals including brokerage firms, stock exchanges, media, and real estate."

The company also tried to offer it as part of an integrated ERP package and more recently it has been positioning various CRM offerings based on the size of the organization and required complexity. has increased its marketing of mobile CRM in India and throughout the Asia Pacific region. India is the world's fastest growing mobile market with over 20 million subscribers added every month. There are also over 500 million people in the middle class in India, many of which leverage their mobile devices for work related access, as well as backup if Internet connectivity is unavailable.

SMB companies account for more than 45% of the manufacturing output and 47% of the total workforce in India. Combine this massive market place with the highest forecasted IT spending growth in the region, by some accounts growing even faster than China, and the software as a service market opportunity can be easily understood as massive. Expect the CRM software vendors to continue to offer creative packaging, increased industry fit and more aggressive promotions in order to take advantage of customers that have been sitting on the sidelines - and further getting their portion of the next high growth enterprise software market. End

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Author  Author: Denise Holland

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Guest K Gangamata Tamal
  The SAAS CRM products are not so industry specific. They are horizontal. Only the in house CRM softwares are industry specific. In retail industry we must use in house software.
  Denise Denise Holland
    Possibly. While many of the SaaS CRM applications were originally developed across industry lines, they are making their natural progression toward tighter industry fits. SaaS can certainly be used in retail, however, will require integrated point of sale (POS) and possibly other creative online systems. Consider this. India has over 15 million retail shops. Many of them are mom and pop shops in both rural and suburban areas. Many don't have a computer and don't feel that there is a need for a computer in their shops. Many of them are also struggling with the advancement of large retail shops and low margins. They also face challenges with delayed payments from customers as it is a normal practice in India to give credit to their customers. The large FMCG (Fast Moving Consumer Goods) companies who supply to them generally don't give more than 15 to 30 days credit. SaaS and IT can play a significant role in solving this retail problem. Imagine a cloud solution like this: A hosted CRM solution partners with Airtel and the solution is made available to users on their mobile devices. Consumers can then make their purchases through the mobile phone. The payment can be routed through mChek who already has a partnership with Airtel and their software ships with all Airtel SIM cards. The customer profile and buying patterns are captured by the hosted CRM/Airtel in the cloud. They can use the information to provide helpful customer analytics and consumer insights for the customer. They can also link the information to the large FMCG players who currently use expensive in-field market research to collect consumer data. The large FMCG companies can then achieve a better idea of what to push through the retailers and the retailers will have a better idea of their customers needs. Finally, the retailer will get relief from their delayed collections. Just a wild example.

Guest Kumar
  What are the concern areas of hosted?
  Denise Denise Holland
    The two most discussed concerns of cloud computing are system availability and information security. To vet system availability, I suggest reviewing the SaaS vendors data center redundancy, uptime history and service level agreement (SLA). To validate information security, I suggest reviewing the 3 P's - People, Processes and Proof. Security starts and ends with people. Make sure the cloud vendor had trained and dedicated information security experts. Security processes include the many layers of redundant security which safeguard data in transit and data at rest. Proof generally consists of independent audits and third party attestations from recognized authorities such as SAS70 and ISO 27001.

Guest Vinay Rajastan
  Who are the biggest software as service companies in India?
  Denise Denise Holland
    The big names include Google with Google Apps, Microsoft with Azure (and hosted Exchange, MS Office, etc), Nokia with CRM mobile access and Airtel Cloud with its Net PC. For the customer relationship management SaaS leaders in India, see The Top 10 SaaS CRM Systems in India. Other business software SaaS solutions in India which I notice increasing their local presence include Intuit, RightNow Technologies, Ramco, NetSuite, SAP Business ByDesign, SuccessFactors and Blackboard. Tata is building out a complete CRM and ERP Software cloud offering which is expected to begin showing results in the next year.

Guest P. Anand
  Are software as service systems hosted in India?
  Denise Denise Holland
    Many are, but most are not. However, India's data center growth will result in more software as a service solutions being hosted locally in India. As of last year, India's (non captive) data center industry was estimated at about USD $1.4 billion, growing at 10% annually and accounting for about 9% of the total global data center market. Key India telecommunications and technology companies are increasing their local data center investments, including Tata, Reliance, Sify, Net4, Ctrl S, BSNL, Level 3 and NetMagic. Several India technology providers are further readying new Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) solutions which will further lead to new data center ecosystems in India. Continued local data center investments in infrastructure, telecom and talent will result in increased SaaS solutions being hosted in India.


India CRM Market

Gartner projects the Indian CRM software market size at about 15% of the overall Asia Pacific (APAC) market, the second largest in the region, after Australia. Between 2009 and 2014, CRM in India is projected to grow at a compound annual growth rate (CAGR) of 16% to 19%.


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As a concept, CRM was understood a lot better in 2009 than in the past. The components of CRM, namely, SFA, customer service, marketing and analytics are well comprehended, which makes positioning a lot easier. In a bid to improve the appeal of our product we decided to position it according to the specific needs of some of the key verticals ..."

~ Thomas Abraham, Sage India


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India Software as a Service Market
  • The India Software as a Service (SaaS) market totaled USD $65M in 2010 and is projected to grow 19% annually.
  • The top four SaaS solutions in India contribute to about 75% of the total SaaS market and include collaboration tools, customer relationship management systems, information security solutions and enterprise resource planning (ERP) applications.


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