Indonesia Digital Software Solutions - Market Share Analysis, Industry Trends & Statistics, Growth Forecasts (2024 - 2029)

The Indonesia Digital Software Solutions Market size is estimated at USD 1.25 billion in 2024, and is expected to reach USD 1.93 billion by 2029, growing at a CAGR of 9.11% during the forecast period (2024-2029).

Key Highlights

• Digital software solutions refer to software products and services designed to solve specific problems or improve processes through digital means. Systems like Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and Supply Chain Management (SCM) help businesses manage their operations and interactions.
• Digital software solutions in Indonesia are experiencing rapid growth driven by several factors. The push toward digital transformation across various industries, including finance, healthcare, retail, and government, has been significant. Investments in 5G and cloud computing have been substantial, with companies and government entities focusing on enhancing connectivity and data infrastructure.
• The adoption of 5G technology has been a significant driver, with initiatives by major telecom players like Telkomsel and Indosat Ooredoo Hutchison leading the way. These advancements are expected to transform industries by enabling faster and more reliable internet services, which are crucial for deploying advanced digital solutions and services. According to Telkom Indonesia, at the end of the financial year 2023, the total number of 5G base transceiver stations (BTS) of PT Telkom Indonesia Group amounted to 654 units.
• In the past few years, Indonesia has made immense progress in digitalization. Because of the speedy pace of technological progression, the country has harnessed digital technologies, and it is anticipated to reap substantial economic advantages in the long run. In December 2023, Indonesia took significant steps in its digital ambitions, as highlighted in a GSMA report unveiled at the Indonesia Digital Nations Summit in Jakarta. The report emphasized that while Indonesia is on the right path, it must embrace a comprehensive, unified approach across all government sectors to meet its digital transformation targets and break into the top 10 global economies by 2030.
• Furthermore, the Government of Indonesia currently has in its hands the flawless momentum to bridge the existing digital divide in the country in addition to fostering digital transformation, after the confirmation of a long-awaited customer data protection law as well as an important contract between businesses in G20 countries.
• In April 2023, Amazon Web Services (AWS), which is an Amazon.com company, proclaimed that PT Telekomunikasi Selular (Telkomsel), which is one of Southeast Asia's major telecommunications providers, had partnered up and announced AWS as its favored cloud provider to upsurge its IT quickness, drive operational competences, and quicken the launch of innovative newfangled customer services. Such instances are expected to fuel the demand for digital software solutions during the forecast period.
• Moreover, the Indonesian government is actively promoting a robust business environment through various initiatives. These include investments in digital infrastructure, such as 5G and IoT, which are crucial for developing and deploying advanced digital software solutions like ERP and HRM systems. Further, inflation in Indonesia is expected to remain around 2.5%, which, along with stable interest rates, provides a favorable environment for businesses to invest in digital transformation without significant cost pressures.
• However, the lack of skilled labor in handling digital software is expected to restrain market growth. The shortage of qualified working professionals has resulted in high fixed costs of software development. Additionally, the digital transformation push brings forth new-fangled challenges, such as cybersecurity, as well as businesses’ readiness to adapt to original digital software solutions.

Indonesia Digital Software Solutions Market Trends

Retail Industry Significantly Driving Market Growth

• Digital transformation in retail combines technology in the retail industry to improve operational competence, enhance the customer experience, and drive development. Retail digital transformation comprises personalized shopping experiences, POS systems, cost optimization, self-checkout systems, branded mobile apps, VR showrooms, geofencing, and AI-powered product endorsements, which demand digital software solutions to operate swiftly.
• Indonesia's e-commerce players have been rapidly increasing over the previous decade and have started to interrupt the traditional retail market. For small and medium producers, this has become an opportunity to capture additional market access. Nevertheless, the entrance of e-commerce players also generates a threat as they produce aggressive market competition for wholesalers and retailers.
• According to Temasek Holdings, an investment company in Indonesia, the e-commerce industry's gross merchandise volume (GMV) reached over USD 62 billion in 2023 and is expected to reach around USD 160 billion by 2030. Such expansion in e-commerce in the country may further propel the segment.
• Furthermore, retailers in the country are managing their business conventionally and might find it challenging to change to a fresh system. This might generate resistance to variation in digital methods from in-store employees, corporate employees, store managers, and customers. Large retailers are communicating the changes swiftly in advance to secure buy-in from key stakeholders and everyday technology users to comprehend their problems and build software solutions appropriate to their needs.
• In October 2023, Indonesia's Luna announced the launch of a fresh round of funding to develop a SaaS retail platform. According to a statement issued by the company's CEO, several merchants in Indonesia still have yet to go digital, whereas those that have gone digital are stuck using outdated software. Thus, the startup intends to offer SaaS platforms to the country's retailers.

Java Region to Witness a Significant Market Share

• Java, the most populous island in Indonesia, is pivotal in propelling the growth of digital software solutions across various industries. Java, particularly Jakarta, Bandung, and Surabaya, is home to numerous tech startups and innovation hubs - cities like Bandung host tech-centric events and conferences that foster innovation and collaboration among tech enthusiasts and professionals.
• The Indonesian government has launched initiatives such as the "Making Indonesia 4.0" roadmap, which aims to integrate digital technologies into manufacturing and other industries. Government support for digital infrastructure development and favorable policies encourage growth in digital software solutions.
• In addition, several successful digital startups and unicorns, such as Gojek and Tokopedia, are based in Java. These companies drive the digital economy in the country and create demand for software solutions that improve efficiency and user experience.
• The e-commerce and fintech industries are booming in Java, boosting demand for secure, scalable, and user-friendly software solutions. Companies invest in digital payment systems, logistics software, and customer management platforms to enhance their operations. According to Bank Indonesia, in September 2023, the estimated retail sales index in Indonesia's capital city, Jakarta, increased by about 15.3% compared to the same month of the previous year. Such expansion in the province's e-commerce industry may further propel the growth of the market studied.
• Moreover, significant investments in digital infrastructure, including high-speed internet and data centers, facilitate the growth of software solutions. Improved infrastructure supports cloud computing, big data analytics, and other advanced technologies. For instance, Fico recently announced the official launch of its cloud-based platform, ETCIO SEA, located in Indonesia. With this launch, FICO is doubling up on its obligation to Indonesia after more than 10 years of serving the market with sophisticated on-premises and hosted solutions.

Indonesia Digital Software Solutions Industry Overview

The Indonesian digital software solutions market is semi-consolidated, owing to the presence of several players in the market. Players are continuously working to provide better protection solutions to their customers. Some of the prominent players in the market include Oracle, SAP SE, Soltius Indonesia, Workday, and Salesforce. They are also engaged in strategic collaborations and mergers and acquisitions, among other strategies, to increase their market share. Some of the key developments in the market include:

• November 2023 - IBM's acquisition of Equine Global, an Indonesian ERP consultancy, underscores its strategic move to expand its presence in the region. Equine Global boasts a portfolio of more than 500 projects, a customer base of over 225, and services for 40,000+ SAP users. This acquisition not only bolsters IBM Consulting's arsenal but also positions the company to assist Indonesian clients in revitalizing their core operations. Moreover, it aligns with IBM's broader strategy, emphasizing hybrid cloud and AI solutions in the region.
• September 2023 - Fifteen tech companies based in Australia, along with stakeholders from Sydney's Tech Central, announced that they were actively considering expansion opportunities in Indonesia, spurred by the Southeast Asia Tech Immersion Mission. Haymarket HQ, an Australian go-to-market accelerator, confirmed that several of its representatives had recently traveled to Jakarta as part of this nine-day initiative.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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