How to Start and Grow Software Company in India

The start-up culture has contributed to the explosive expansion of software companies in India during the past ten years. The third-largest start-up ecosystem in the world is in India, and this trend does not appear to be slowing down as seen by the growing number of start-ups attaining “unicorn” status. In the fiscal year 2021, software businesses produced up to $194 billion in revenue and made about 8% of India’s GDP.
India offers a favourable climate for developing a software company, with the government offering a wealth of funding opportunities for new or established IT enterprises. However, doing the same necessitates adhering to several legal and regulatory regulations.
This article examines the steps involved in starting a software company, paying particular attention to registrations, statutory and regulatory compliances, and other procedures.

Types of Software Companies

Most software firms fall into one of two categories:
  • Corporations like Google, Amazon, and Microsoft that focus on producing software products for user consumption are examples of product- or development-based software companies.
  • Business consulting, outsourcing, and engineering services are just a few of the services or consulting-based software providers that include Infosys, TCS, and Wipro.

Processes involved in setting up a Software Company in India

Following some fundamental procedures is necessary to enable the seamless establishment and operation of the firm once the decision on the niche market the software company will operate in has been made.

Type of Business

Choosing the kind of software products or services, the audience for whom they are intended, and their functionality is the first stage. It is beneficial to create a thorough business plan that outlines the goals, principles, mode of operation, growth plans, funding strategies, staffing and marketing strategy, among other necessary information.

Choosing The Type of Entity

Owners of the firm should choose whether to operate as an LLP, private limited company, or sole proprietorship depending on the needs and goals of the business while also considering the legal repercussions.


Running a business requires a lot of money. Entrepreneurs who want to launch a software business should decide how they will raise money and draw in investors. One can choose the conventional path of obtaining financing from banks, contacting angel investors, or engaging venture capital firms.

Registered Office

Every company needs to have a registered office address. Companies can seek to have the office registered with the RoC and choose the location and space based on their needs and size.


It’s crucial to acquire certain licences after obtaining the necessary registrations. It’s a good idea to register trademarks, patents, software licences, and STPI. The STPI licences are for software start-ups and offer them a variety of advantages and facilities, including, among others, tax exemption for five years, exemption on export and import duty for products for a specific duration, and the ability to lease office space at a reduced cost.

Register As An Employer

If the business wants to hire workers, the owners must register as employers with the relevant State Employment Department.

Register With A Software Technology Park

Companies might choose to register with Software Technology Park in order to qualify for tax breaks and other government incentives.

Strong Team

An effective technical team with competent programmers and engineers, a strong business and marketing team, experts in design, and HR who can handle several facets of the operation of the company are essential to establishing a software company. A software company should always be supported by a strong and capable staff of attorneys and consultants to ensure efficient operation.

Business Software

In order to run a software business, one needs the necessary software that can automate numerous operational tasks as well as track and monitor sales, HR operations, finances, and big projects. Effective CRM software can optimise business processes and enable the efficient operation of the company.

Business Insurance

Risks and responsibilities associated with operating a business can result from both anticipated and unforeseen events. Having IT business insurance is usually advisable to shield the organisation from potential losses, lawsuits, and other obligations. Software firms can also consider professional liability insurance and commercial property insurance, which can defend against property loss, other liabilities of a similar nature, or customer lawsuits.
Major revenue-generating software companies are increasingly locating in India, and the growth of the start-up culture is further accelerating this trend. Software companies are a significant source of income for the nation and support millions of jobs nationwide. India offers a supportive atmosphere for both the employers and employees of these businesses to thrive, making it a lucrative business setup for entrepreneurs. Entrepreneurs should, among other things, be aware of the legal and regulatory requirements and several other compliances involved for the successful operation of the firm. Starting and running a software company is an exciting but challenging undertaking.