Open-source software can help Indian IT startups crack a $100B untapped market

India’s IT story has largely been about outsourcing. For decades, IT startups in India have been the world’s most reliable “back office”, bringing process-driven innovation to the West. This trend, however, is about to shift as a new opportunity emerges at home: helping India’s MSMEs run on world-class, open-source software like Odoo under their partner program.

Two major factors are at play here, hinting at a potential pivot that may reshape the country’s IT startup ecosystem.

First, uncertain demand and a challenging geopolitical environment make reliance on US and European markets riskier than ever. Add to that the rise of agentic AI systems that threaten to make software developers obsolete, and labour-arbitrage suddenly feels less like a mote and more of a liability for Indian tech companies.

Meanwhile, Indian MSMEs are entering a new era of digital transformation. Driven by global competition and regulatory pressures, MSMEs are looking to accelerate digital adoption beyond modest Excel sheets and bulky legacy software.

India’s MSME digitization market is expected to be worth 100$ Billion by 2035. That is more than six crore businesses embracing a digital-first approach with new-age tech that allows for greater efficiency, growth, and expansion. Be it adopting cloud solutions, transitioning to digital payments, selling on e-commerce platforms, or ensuring cybersecurity, Indian MSMEs have a long way to go.

Here is where our massive IT infrastructure comes into play. Homegrown companies that served overseas clients for decades now find themselves in a unique position to serve Indian MSMEs, thanks to their experience with market-relevant tech and readily available manpower. They don’t just understand the local economy but can also meet the rising demand for digitization thanks to affordable, open-source tech.

Out-of-the-box, ERP solutions geared specifically for MSMEs become relevant here. For decades, larger enterprises have relied on legacy systems to integrate core business processes into a single management hub that handles data pipelines, automates tasks, and enhances operational efficiency.

MSMEs in India are increasingly feeling the need to embrace such systems in order to remain competitive and compliant in a ‘digital first’ economy. As growing regulatory needs demand higher operational and financial accuracy, affordable ERP systems, designed specifically for MSMEs, will witness widespread adoption.

Here is where solutions like Odoo come into play. These are plug-and-play, out-of-the-box solutions that can be easily configured to accommodate most business flows and requirements. Indian IT startups can leverage these to implement standard solutions that work great for most businesses.

Odoo’s partner program, for instance, allows partner companies to ship Odoo’s suite of business apps to digitize their client’s businesses. Odoo’s partner companies have generated over 5,000 crores in revenue just in 2025. Many have even cracked government projects, implementing Odoo’s suite of apps across various sectors. Odoo’s partner network has grown from 50 to 600 within India in just two years, stating without a doubt that digitizing MSMEs is an emerging market opportunity that IT companies can monetize today.

The model works especially well because implementors don’t have to build a custom solution for each client from scratch. Open-source app suites like Odoo allow companies to use popular, market-tested solutions built on global business standards that can easily be configured for local needs.

This is a win-win, both for MSMEs and IT startups. MSMEs get enterprise-grade software at a fraction of the cost that can manage their entire business on a single platform. While IT companies can tap into an emerging market by leveraging existing solutions and following standard implementation procedures.

The Indian business landscape is about to witness a paradigm shift. Led by our IT infrastructure, Indian MSMEs will undergo a massive digital transformation relying on platforms like Odoo, adding around 1 trillion dollars to our GDP in the coming decade.