Accelerating SaaS growth with India-based GCCs

In the ever-evolving landscape of business technology, few innovations have made as profound an impact as Software-as-a-Service (SaaS). Driven by several factors, including the need for scalable solutions, reduced upfront costs, and the ability to provide continuous updates and support, the shift to SaaS business models has emerged not only as a disruptive force but also as a significant driver of economic growth. 

The global SaaS market is projected to reach $307.3 billion by 2026, growing at a compound annual growth rate (CAGR) of 12.5% from 2021. In spite of SaaS investments seeing cooling interest in recent quarters due to the challenging macro environment, 47% of VC funding in 2023 went to companies with a SaaS business model – the largest in a category since 2013 (Dealroom). Furthermore, so far this year, SaaS and enterprise software companies have raised $4.7 billion in seed- through growth-stage financing (Crunchbase). 

But with great growth and investment come greater challenges.

The Challenge of the SaaS industry

While Asia-Pacific is predicted to be the world’s fastest-growing SaaS market in the next decade, today approximately 60% of the world’s 25,000+ SaaS companies are in the US. For a majority of these US-based startups, their target markets are elsewhere, presenting a significant challenge in setting up and scaling the business internationally. 

And therein lies the challenge.

Expanding beyond the home country requires navigating diverse regulatory environments, cultural differences, and market dynamics. Additionally, the competition for a limited talent pool intensifies as numerous companies vie for the same skilled professionals, making it difficult to attract and retain the best talent essential for growth and innovation.

The median public SaaS company spends 140% of its revenue on payroll 4 years before IPO and slowly decreases the ratio to 125% during the year of IPO. The dynamics don’t change much for early-stage companies. At Series A, a venture-backed SaaS startup in the Bay Area with $1 million in revenue is likely employing somewhere around 20-40 people, and spending $3-4 million per year on salaries. 

On the tech infrastructure front, for a typical SaaS company, cloud hosting costs alone usually account for 6%-12% of their SaaS revenue and constitute a sizable portion of their cost of goods sold (EY). 

In face of these challenges, fast-growing Enterprise SaaS companies need a sustainable solution that allows them to efficiently build their operations outside their home base and scale at speed.

Can GCC be the answer to this?

Global Capability Centers (GCCs) serve as strategic extensions of multinational companies' operations, enabling them to access global talent pools, drive innovation, and enhance operational efficiency. With GCCs, companies can establish dedicated teams in countries like India, the Philippines, or Poland, leveraging local expertise while maintaining control over processes and quality standards. 

According to National Association of Software and Service Companies (NASSCOM), there are around ~1600 GCCs set up in India that employ approximately 2 million people and generate revenues to the tune of roughly $50 billion p.a. To put this in perspective, if we take the 85 GCCs set up in the last 12 months (source: NASSCOM report), India is on a run-rate of 1 brand new GCC every 5 days!

But as a fast-growing startup, building a GCC from the ground up may not align with its desired (and essential) fast pace of growth. The speed to market, time to value, and other critical parameters may be negatively impacted in the “figuring out” of the recruitment, governance, and other non-negotiables. 

Finding the right GCC partner

With specialised knowledge and expertise in navigating regulatory requirements, recruiting top talent, adopting latest tech and innovation, and optimising operations, IT Services and Consulting companies are well positioned to become a SaaS startup’s partner in setting up and managing GCC in India.

Further, partnering with an IT Service company for its GCC set up allows startups to quickly leverage global talent and resources without the time-consuming process of building infrastructure and capabilities from scratch. According to the latest survey conducted by NASSCOM and KPMG, over 72% GCC leaders identified talent management as a key priority for GCCs.

This is in addition to mitigating risks in cultural differences and geopolitical instability, while providing the flexibility and scalability in adjusting the size and scope of their GCC, based on changing business needs and market dynamics.

The same NASSCOM and KPMG survey also highlights the importance of compliance for GCCs based in India with 81% respondents mentioning ‘transfer pricing’ as their regulatory priority, which is one for the top five regulatory considerations for the CXOs. The other four being SEZ and STPI compliance, labor laws, DPDPA, and FEMA.

Empowering fast-growing enterprise software firms to scale swiftly and securely, this technology partner offers the ideal blend of engineering talent, tech services, and strategic alliances. Startups gain full-stack capabilities and access to a vast pool of skilled resources, enabling rapid development and innovation. Flexible engagement models—such as Build-Operate-Transfer and pay-as-you-go—help manage costs, reduce risk, and speed up go-to-market timelines. With dedicated Centres of Excellence across Digital Engineering, Cloud, Security, Data & AI, and a strong focus on training and process maturity, emerging SaaS players benefit from consistent methodologies, operational best practices, and a culture of continuous innovation.

So, no matter the challenge - international scaling, understanding and adoption of the latest technologies or winning the talent war, to overcome these hurdles and sustain growth, SaaS companies must consider co-building a GCC rather than setting up its own. 

Gaurav Gupta

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Gaurav Gupta is SVP of Hi-Tech Delivery, GCC Expert at Xoriant.