The Indian Software-as-a-Service (SaaS) market could reach $1 trillion in value in the next nine years, Chennai-based SaaS consortium, SaaSBOOMi, in a report said.
The report also said that the SaaS boom could see the creation of half a million new jobs. Currently the Indian market comprises more than 1,000 funded SaaS startups and over 10 unicorns, which generate $203 billion in annual revenue and employ over 40,000 people yearly, the report said.
During the pandemic phase, six SaaS companies turned unicorns. The list consists of Postman, Zenoti, Innovacer, Highradius, Chargebee and Browserstack.
2020 also saw an investment of $1.5 billion into SaaS companies in India, representing a 4x jump over the past two years.
“While there are challenges ahead, these are not insurmountable and SaaSBOOMi is of the view that there is nothing that can stop the Indian SaaS community from making SaaS a preeminent industry in India,” Manav Garg, founding partner SaaSBOOMi, said.
SaaS also currently accounts for 20% of enterprise technology spending in India, while the global growth for SaaS is expected to cross $500 billion in revenues by 2025, SaaSBOOMi in a statement said.
The report includes inputs from over 40 SaaS startups in India, and has been anchored by SaaSBOOMi’s Manav, with inputs from Freshworks co-founder Girish Mathrubootham, BrowserStack’s CEO Ritesh Arora, CEO of Chargebeem Krish Subramanian.
The report also includes views from VC firm founders Mohit Bhatnagar of Sequioa Capital and Shekhar Kirani of Accel Partners.
The environment in India is apt for the growth of SaaS owing to the country’s traditional strength in horizontal SaaS offerings (customer relationship management (CRM) enterprise resource planning (ERP) and collaborative applications) along with a good understanding of developer tools and requirements of specific verticals, the report said.
However, most SaaS startups face significant challenges in the earlier stages of growth in terms of developing talent at scale. The report also pointed out that the SaaS ecosystem might need to increase funding by 3-4 times to reach the $1trillion-mark over the next decade. This will involve a cohesive effort by industry associations, government, corporates and investors.
“To create awareness around the potential of SaaS in India, it is imperative for the Government to collaborate with industry associations, investors, and corporates, and drive large-scale training programs by partnering with universities and institutions,” Debjani Ghosh, president of the National Association of Software and Service Companies (NASSCOM), said.
A July 2020 report by marketing research firm Statista Estimates that the global SaaS market could exceed $600 billion by 2023.
SaaS has also been one of the highest performing categories in technology, media and the telecom industry, globally and in India.
“If Indian SaaS providers execute to their full potential, they could generate annual revenues of $50-$70 billion by 2030 and win 4-6% of the global market,” SaaSBOOMi in its report said.