Info-tech

Indian SaaS has potential to create $1 trillion in value: Report

K V Kurmanath Hyderabad | Updated on July 08, 2021

The Indian SaaS industry currently has more than 1,000 players with over 150 companies generating an Annual Recurring Revenue of more than $1 million   -  THE HINDU

Six unicorns in SaaS space during the pandemic

The Software-as-a-Service (SaaS) services and solutions in the country has come of age. The Indian SaaS space has the potential to create $1 trillion in value in the country in the next nine years. It can generate five lakh new jobs during the period.

Increasing pace of digital transformation and transition of legacy software firms into SaaS space are the key triggers for the growth.

With nearly 1,000 funded SaaS startups and ten unicorns (those with a valuation of over $1 billion) dotting the space, the SaaS ecosystem collectively generates about $2-3 billion in annual revenue and employ nearly 40,000 people.

“The Indian SaaS space has the potential to create $1 trillion in value and nearly five lakh jobs by 2030,” according to the report ‘Shaping India’s SaaS Landscape’ The report was released on Wednesday by SaaSBOOMi, the Asia’s largest community of SaaS founders and product builders.

SaaSBOOMi, in association with McKinsey and Company, has done a research on the prospects for the SaaS companies in the country.

Unicorns

Six new SaaS unicorns were born during the pandemic -- Postman, Zenoti, Innovacer, Highradius, Chargebee and Browserstack. In 2020, $1.5 billion was invested in Indian SaaS companies, representing a four-fold jump over the last two years.

“If Indian SaaS providers execute to their full potential, they could generate annual revenues of $50-$70 billion by 2030 and win 4-6 per cent of the global market,” the report said.

“Based on recent public SaaS company revenue multiples, this represents a value-creation opportunity of as much as $1 trillion,” it concludes.

The SaaS ecosystem needed to increase funding to three to four times the current levels to reach its potential over the next ten years. This, the report observes, requires concerted support across all stakeholders - industry associations, government, corporates and investors, it said.

“The global SaaS market is expected to cross $500 billion in revenue by 2025, growing at 18-20 per cent annually,” the report said.

Challenges

The report, however, pointed out that the SaaS companies are facing significant challenges in early stages of product development and marketing. Developing talent too is a major challenge for them, it observed.

“They need to shift to a growth-first mindset with focus on investing in core operational capabilities to scale and win,” it says.

“The findings in this report will provide Indian founders with insights that will help them engage in long-term planning and accelerate future growth,” Manav Garg, Chief Executive Officer of Eka Software Solutions, and Founding Partner of SaaSBOOMi.

“Increasing digital transformation is accelerating SaaS adoption aiming to perform analytics and artificial intelligence,” Debjani Ghosh, President of National Association of Software and Services, said.

Pandemic impact

The Covid-19 global crisis has created an unprecedented push towards SaaS, with companies across the spectrum moving to online and remote work.

“Legacy software players are transitioning to SaaS, delivering further impetus to the industry. SaaS is expected to generate about 80 per cent of software revenues by 2030, up from about the present level of 35 per cent,” it said.

Published on July 08, 2021

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