Calcutta, Dec. 1: Improving economic sentiments and political stability have led to a 10.7 per cent growth in the Indian software market between January and June compared with the corresponding period in 2013, research firm IDC said today.

The formation of a stable government at the Centre has led to some positivity in the market, which resulted in increased investments by companies operating in sectors such as BFSI, manufacturing, retail and e-commerce.

Several big deals, which were in the pipeline since early 2013, saw a successful closure by vendors.

“Large as well as small and medium business (SMB) customers are looking to curb their capital expenditure and are keen to embark on the cloud journey. This has led the vendors to make their licensing policies more flexible and easier so that existing customers could smoothly make a transition to a cloud environment,” said Shweta Baidya, senior market analyst (software), IDC India.

IDC has predicted the segment to grow at a compounded annual growth rate of 10.5 per cent till 2018. There will be an increased use of software in mobile application development and device management, security and system software, analytics and engineering applications.

Government projects such as Mobile Seva, Digital India and Pradhan Mantri Jan Dhan Yojana will also trigger the adoption of software solutions.

The launch of various schemes and policies is expected to catalyse software uptake by manufacturing, retail, travel and tourism and BFSI in the next 2-3 years. In fact, BFSI, communication and media and manufacturing were the top investors in software upgrades and new licences.

The rise in the adoption of open source software, especially by the SMB segment reluctant to block its capital on expensive proprietary software, will also drive growth.

Co-operative and small banks and telecommunications are also on the lookout for customised solutions based on the open source model to infuse flexibility and manage costs.