Microsoft's Meteoric Rise in India, FY23 Revenues Soar to Rs 19,229 Crore

Microsoft, the world's largest software company, has continued its remarkable growth trajectory in India. In FY23, the company recorded revenues of Rs 19,229 crore ($2.3 billion), showcasing a substantial improvement of over 39% from the previous year. This impressive topline growth was in line with the FY22 rate of 47%.

The Arc, a business research platform, conducted an in-depth review of Microsoft's regulatory filings in India, providing insights into the company's performance.

Despite the revenue surge, Microsoft's Indian unit saw a net profit margin of 3.3%, significantly lower than its US parent's margin of 31-36%. The discrepancy in profit margins can be attributed to the substantial royalty payments made by the Indian unit to its US parent. This royalty, accounting for various services and products like Office Suite, cloud services under Azure, and Bing, surged by 52% to Rs 13,139 crore ($1.58 billion) in FY23, comprising 68% of the annual income, up from 63% in the previous financial year.

A significant transformation in Microsoft's revenue mix in India has occurred over the years. The company has shifted from being a seller of licensed and on-premise software services to a cloud-native player. The share of services revenue in the topline increased from 51% in FY20 to 74% in FY23, while the share of revenue from the sale of Microsoft retail products decreased from 49% to 26%.