How to Start and Grow Software Company in India

Vibhavari Madki Vibhavari Madki
Apr 13, 2022 8 min read
How to Start and Grow Software Company in India

In India, there's a crisp growth of Software Companies in this decade, it is almost like there is a software business revolution. The fact is India is the third-largest Software Startup Ecosystem around the world. Starting a software company in this country can prove profitable as every business is associated with technology and its services.

There are numerous Software giants in India like Infosys, Wipro, Tech M, TCS, and many more who are providing software solutions to the clients. The software companies are developing in all major cities in India. There are also multiple multinationals like Capgemini, L&T, Tata, Mphasis who have established themselves in the Indian market and are continuing to do so.

Growth of Software Industry in India
Types of Software Companies
Raise Funds for Software Companies
Steps to Start a New Software Company
Legal Entities for a Software Company In India

Growth of Software Industry in India

IT Spending in India
IT Spending in India

In India, Software businesses contribute around 8% to the nations GDP. Based on hundreds and thousands of software services companies that were started around the last three decades, to everyone's surprise, the software industry has generated $180billion in revenue and also more than $135 billion in exports in the first quarter of 2019 alone. Indian IT industry generated $200 billion revenue in 2021.

This industry has generated around 5 million direct jobs in India. Additionally to this growth, the largest Indian software services company is estimated and valued at over US$100 billion and generates over US$20 billion in revenue.

The IT service spending in India reached around 18.12 billion U.S. dollars in 2021.

Types of Software Companies

The Software Companies in India can be categorized into types in which the businesses function. To start a company, the right category needs to be chosen. There are mainly two types of a software company

1. Product-Based Software Company

The Product-based Software Company deal with end products and sell them to targeted customers. This type of Companies have products or set of them which provide a major portion of the company's revenue. Some best Software Product-based Or development-based Software Company In India are Amazon, Microsoft, Cisco, Google, Tally and many more.

2. Service-Based Software Company

The Service-based Software Company deal with services which are to performed and sell them to the targeted audience. The Services provided are Business Consulting, IT, Hardware and Software Engineering and outsourcing Services to clients.

Top Software Consulting Or Service Companies In India are Wipro, Infosys, Accenture, Tech Mahindra, Oracle and many more. The Services Companies provide are Application Development, ERP Solutions, Programming, Quality Assurance and Testing, Custom Business Solutions, Customization, Database Migration, Collaborative Commerce, Multimedia Offering

Raise Funds for Software Companies

Raising funds for software Companies
Raising funds for software Companies

Traditional Businesses depend on Bank Loans and other means like asking for investment from friends, family members but it is somewhat different from online businesses. In this industry, there are a lot of angel investors for the Software development of Software Companies. There are numerous financial ways the entrepreneurs adopt to collect funds from various means and it is not difficult as it seems.

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Steps to Start a New Software Company

Certain smart steps to be followed to start with a new Software company

1. Choose the type of Business

types of Software Requirements
Types of Software Requirements

Consider the factors like choosing the appropriate type of products and services, target the specific audience or market, profitability and feasibility of the business. Software company entrepreneurs have to consider several situations before making a choice. Entrepreneurs should pay attention to targeting a niche market as the competition.

It is also required to focus on making use of new channels for distribution that effectively provide solutions. Software entrepreneurs are also supposed to give better economical solutions making customers interested in buying their products and services.

2. Better Products

Entrepreneurs have to think and come up with a better version of their products which is also called an update in the existing plan. Once a full-fledged and integrated product is developed and set out in the market, it should be protected through copyright and trademark.

Entrepreneurs also start marketing on a digital platform as the software is mostly among the young crowd, it has to be noticed by them and make themselves a space to promote the product. It can be started by creating a website and then providing a demo of the updated software. Suitable Platforms like Facebook, Twitter, YouTube should be used for promotion, providing information on the new updates, and getting feedback from the viewers.

3. Obtaining Licenses

Licenses are meant to approve the businesses to carry out the procedure without any legal interruptions. The STPI Licenses are exclusively for new software companies starting in India and provide them with several facilities and benefits like no tax payment for 5 years or no import or export duty for software products. The license holders can also enjoy the facilities like availing offices at lower than usual rates.

4. Deciding Office Spaces

When there is a plan for starting a software company, the entrepreneurs should also plan for ideal office spaces or working spaces. A location that has the most appropriate infrastructural facilities such as consistent internet connection and easy availability of resources should be chosen.

The business owners should aim at making the minimum possible investment in securing the office spaces. There are options like renting or leasing office space. The necessary equipment like computers and furniture can also be second-hand purchased to easy start the operations.

5. Importance of Advisory Team

In the quest to find like-minded people who are willing to participate in the business. Business owners should find a share similar level of enthusiasm, in addition to knowledge.

The collaborations are also helpful in providing distribution and marketing channels for the products and offering integrated solutions. The advisory team should comprise tech-savvy people, marketing professionals and design team along with experienced industry professionals who can provide ideal advice.

6. Planning the Human Resources

When the company is started and running, entrepreneurs should focus on recruiting talented people. India is a place where there are plenty of well-trained professionals especially in the sector of software technology.

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Before starting a Software Business in India, entrepreneurs need a legal entity for Business. There is some popular legal entity which is enabled to start the Business In India.

  • Sole Proprietorship - Probably the best legal entity to try and start new ideas in starting with nominal cost. Its won't be a company but owners can say a Sole Proprietorship firm.
  • Partnership Firm - It is a good opportunity for businesses when the business owner has Co-Founders and try collectively to work out the business idea with a minimum legal cost.
  • Private Limited Company - A Real Company for Businesses in India. Almost more than 90% of business owners register their Companies in India as a Private Limited Company.

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Planning and opening up a software company in India indeed requires much effort and energy. But there are certain ways and instructions to be followed for a successful outcome. Entrepreneurs should not neglect the steps and learn from other companies’ experience and mistakes and accept the challenge.


Which city has more software companies in India?

Bangalore is the IT Capital of India and a global information technology hub in the country. The city is known as the Silicon Valley of India with large number of software companies in India and many top Indian firms like Infosys, Wipro, Mindtree are headquartered in Bangalore.

How much does it cost to start a software company in India?

To fill out these forms, you need to provide basic information about your software company, your personal information and your manager's or director's personal information. Registration fees are 1,000 Indian rupees, or about $23, on average.

How can I start my own software company in India?

Four major steps to register a company/ startup in India:

Step 1: Acquire Digital Signature Certificate (DSC)
Step 2: Acquire Director Identification Number (DIN)
Step 3: Create an account on the MCA portal- New user registration @
Step 4: Incorporate or Apply for the company to be registered.

How much does it cost to start a software company?

It costs around $1,125 to go from an idea to a functioning software product (including our first month of operations).

Do software companies make money?

The software vendor gets recurring income and an opportunity to increase the subscription fees annually and upsell premium packages. The recurring revenue helps SaaS vendors achieve the break-even point faster than Licensed Software vendors and earn higher profit in the long-term.

How to get clients for a software company?

Getting clients for your software company is challenging. These are some ways to get potential clients-

  • Referrals previous clients. Getting referrals from previous clients is by far the best source of getting new clients.
  • Social media.
  • Directories & marketplaces.
  • Your company website.
  • Outbound sales.
  • Network.
  • Events & trade fairs.
  • Partnerships & resellers.

How do companies make money from free software?

Most free web services plan to make money by the following: Freemium model - sell a free product and plan to convert some of them to a paid plan. Majority of SaaS products use this model. Limited period promotion - Start with the free product for a promotional initial period and plan to charge it later.

Which are the top software companies in India?

Top software companies in India are:

  • TCS
  • Infosys
  • Wipro
  • HCL Technologies
  • Tech Mahindra
  • Larsen & Toubro Infotech Ltd.
  • Mindtree Ltd.
  • Capgemini India Pvt ltd.
  • Mphasis
  • Accenture

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