Despite India being a global hub for SaaS (software-as-a-services) businesses, Indian companies have not been big buyers of B2B enterprise software. However, with digitisation now essential for businesses and as AI’s benefits in productivity and costs optimisation get apparent, this trend has changed.
SaaS companies report a growing share of revenue from the Indian market and for some of the more established ones, India is also the second-largest market globally after the US. Though the addressable market is smaller compared to the US, Indian companies are maturing when it comes to buying SaaS products and deep integration of AI is only going to boost this adoption, founders told businessline.
For Zoho, India is the second largest market after the US, and the top one in terms of growth rate. In case of SaaS firm Kissflow, their India revenue has grown 3x YoY over the last 12 months. In the fiscal year 2024, Salesforce India’s revenue grew 36 per cent YoY to end at ₹9,116.3 crore.
“SaaS tools are currently being actively adopted by Indian companies of all sizes and in a variety of industries, not only for simple requirements, but also for intricate, mission-critical processes,” Mani Vembu, CEO, Zoho.com, said. He considers this a sign of the maturity of the Indian SaaS market, and says AI has helped accelerate this momentum.
Suresh Sambandam, CEO, Kissflow notes that their efforts to focus on India have brought results. ”Companies are now closing multi-year contracts worth half a million dollars or more. So yes, the India market today is far more mature, lucrative, and ready for enterprise SaaS than it was a few years ago,” he said. “There’s a clear shift from being in the discussion phase to actual implementation and budget allocation [in India],” he adds.
“Indian enterprises are adopting AI at a much much faster pace than large enterprises in the US...In India, the sales cycles have gone from the typical 12-18 month cycles, to 6-9 month cycles,” Ashwini Asokan, co-founder and CEO of SaaS firm Mad Street Den, recently wrote on X.
The deep AI integration in SaaS products is also expected to help India revenues expand faster in coming years.
“AI is also opening doors to high-value sectors such as BFSI, healthcare, manufacturing, and government -- all of which are doubling down on automation and cloud-led transformation,” Zoho’s Vembu said. Vembu notes that large multinationals, who would earlier pick a single platform across geographies, are now taking customised decisions due to data protection laws and the impact of the total cost of ownership.
However, some say the growth is mostly for the mature SaaS firms and the Indian market is not yet ready to take bets on early-stage AI-native SaaS products.
“To sell in India, you have to first start by building scale in the West. Many of the companies that have a large India market today, built and demonstrated scale in the US and Europe to get here,” a SaaS founder, who wished to not be named, said.
“For some non-core, outsourced parts of their businesses, if AI is offered as a service, Indian businesses will easily adopt, especially if it is on a consumption basis,” Prasanna Krishnamoorthy, Managing Partner, Upekkha, an AI accelerator, said. The Indian ecosystem does not have a lot of early adopters but does have a lot of fast followers- when something is seen to work and deliver results, adoption is rapid, he adds.