Mobile apps industry to make positive impact on economy

Mobile apps industry to make positive impact on economy

Mobile apps industry to make positive impact on economy

India is at the cusp of mobile apps revolution. The fast growing mobile internet user base, and the second largest Internet user base, just behind China, makes it ideal for app developers to tap this opportunity and contribute to the growth of the apps economy. Also, with consumer interest very high, app developers are in a happy space.

The ‘Make in India’ programme by the government of India is also a prop to augment the apps economy. Also, with ecommerce companies going on mobile platform and an unprecedented growth in the hyperlocal segment, the industry will not be surprised to witness a faster growth rate in the near future.  By 2018, 500 million Indians are likely to be on the internet and a large portion of them will be mobile-only. This calls for the entire ecosystem — brands, content creators, experience designers, technology providers and more — to completely rethink the way content is created and consumed. A very important role is going to be played by mobile apps. I sincerely believe in the potential of mobile apps industry to make a positive impact on the economy.

The multipliers

India’s app economy is witnessing exponential growth. A study published by  Indian Council for Research on International Economic Relations (ICRIER) and Internet and Mobile Association of India (IAMAI), titled “An Inquiry Into The Impact Of India’s App Economy” estimates direct employment in this industry to range between 1,51,230 and 1,59, 010 by 2016. Accordingly, the increase in direct employment attributable to India’s app economy is expected to range between 76,230 and 84,010 jobs from 2014 to 2016. Besides, Apps create downstream jobs in sales and marketing and in customer sales management. They also cause income growth that has its own secondary impact on jobs.

These indirect and induced effects could result in an increase in total employment by up to eight times during the period 2014 to 2016. At its best, the app economy could generate over six lakh jobs. The study estimates the size of India’s app economy at Rs 1,964 crore by 2016.  As per estimates, there are roughly three lakh app developers in India.

 Distribution of developers

The well known and established IT cities in India are attractive for app developers, because they provide with easy access to infrastructure, skill and a ready market for products.
The concentration of app developers are in Bengaluru, Mumbai, Delhi NCR, Hyderabad, and Ahmedabad. A larger percentage of developers in such IT cities make apps on a full-time basis as compared to developers in other cities. Bengaluru, Mumbai, and NCR have the maximum number of companies (organised business operations) engaged in app development. Cities like Ahmedabad, Hyderabad and Chennai host many small teams of app developers as well as self-employed app professionals. In most of the other cities such as Bhubaneshwar, Cochin, Coimbatore, Gandhinagar and Kota, app development is done primarily on a part-time basis and is not the primary source of income. This could be the result of limited monetisation options that make app development an unsustainable livelihood for many. The future of apps market in India is really bright in the coming period. 

Revenue models 

Apps need an ecosystem to thrive. One major challenge for app developers in India is to transform a good idea into commercial success. The present rate is not encouraging. Most developers try to optimise their odds of becoming profitable, for example, by choosing the platform with the highest installed user base. Other factors driving the operating system (OS) choice are familiarity with the development environment and the cost of development.
On the whole, app development is not considered to be a remunerative business opportunity. While some developers are engaged in contractual development, there are few developers who self finance their project and do not actively market or promote their app.

The business of app development in India seems to be at a stage in which it could be characterised as one based on a ‘hit and trial’ philosophy.
Most apps in India are distributed either by app stores or on the developer’s websites.
Almost 70% of the developers use app stores. In rare cases, developers email their app to a target group of users. Developers spend up to 85% of their development cost on marketing. Other avenues for marketing include social networking websites, promotions in magazines and cross promoting new apps on an existing app. Popular revenue generation models include advertising, in-app purchasing, freemium and pay per download. 

The vast majority of apps in India are ‘free’ for the consumer. This means that revenue generation for the developer is either through advertisements or through royalty. In cases, where the consumer pays for the app, the modal price range is between Rs 50  and Rs100.
Challenges before the market

Absence of skilled manpower, high cost of development, limited or no access to finance are major impediments to growth. A few other challenges include high cost of user acquisition, hyper competition driven by independent and freelance developers and the high cost of marketing. Industry stakeholders are concerned by the clutter in the developer market, although this could sort itself as the industry evolves and underperforming and uncompetitive developers gradually weed out. In terms of monetisation, the challenge is related to the preference for free apps and a user base that is limited in terms of their familiarity with the mobile and internet ecosystem.

(The author is the AVP, Internet and Mobile Association of India-IAMAI)