SAP looks to India for enterprise market growth

Validating some of the forecasts made by technology analysts such as Gartner and Forrester about the Indian market, the Indian arm of global software major, SAP, has recorded over 100% growth in licence fee revenues in the June 2009 quarter, even as developed markets like the US and the UK struggle to grow.

The German software maker enjoys a dominant position in the enterprise market and its India subcontinent head, Ranjan Das, is suddenly in focus because India and China are two regions that are still delivering good growth in hard times.

“There is a slowdown. But, India and markets like China are still growing rapidly for SAP, which is both good and bad. Good because we’re getting a lot of attention and focussed investment from SAP, but personally, bad for me because expectations are high,” Mr Das told ET in an exclusive interview.

In terms of total revenue (licence fees plus consulting and support fees), growth from the India sub-continent was 62% as compared to a 12% fall in growth for the Asia-Pacific and Japan region. Licence fee revenue is revenue from the sale of the product giving the customer the licence to use it on a specified number of installations. If the customer also wants maintenance and support or consulting, these are in addition to the licence fees.

SAP does not share absolute revenue figures for India, but Mr Das said the sub-continent had become one of the top-10 revenue generating regions for the software maker, despite being the 14th largest economy in world.

Only two years ago, India was at number 15, but today it is at 7th or 8th. India is even bigger than China for SAP, according to Mr Das. A year and half ago, SAP was expecting to double its India’s business, now it is looking at 40-60% growth.

Mr Das feels the reason why India is beating China is because Indian companies have a better understanding of the value software can provide in bringing cost efficiencies. The big IT spenders for SAP here are telecom firms, public sector undertakings, and services firms. It recently announced engagements in telecom with Vodafone, Tata Teleservices and BSNL.