The Indian SaaS (Software-as-a-Service) community is maturing and has the potential to become a $1 trillion opportunity over the next 10 years, according to a report.
The report - Shaping India’s SaaS Landscape - highlights that there are nearly 1,000 funded SaaS companies in India, of which 10 have unicorn status and are generating about $2-3 billion in revenues while employing 40,000 people. The report has been released by SaaSBoomi, a community of SaaS founders and builders, alongside McKinsey & Co and Nasscom.
The Coronavirus (Covid-19) crisis has created a push towards SaaS, with companies across the spectrum moving to online and remote work. Over the last one year, six new SaaS unicorns were born during the Covid-19 pandemic, namely Postman, Zenoti, Innovacer, Highradius, Chargebee and Browserstack. In 2020, $1.5 billion was invested in Indian SaaS companies, representing a four-time jump over the last two years.
“India has an exciting opportunity to propel itself on to the world stage as a SaaS force to be reckoned with,” said Manav Garg, CEO & founder, Eka Software Solutions, founding partner, SaaSBOOMii.
While investments in the Indian SaaS industry are rising, with about $1.5 billion in VC funding being invested in 2020 alone, a lot more would be required to keep this momentum going. The Indian SaaS space also has had limited exits via acquisitions, buyouts or IPOs so far only 5-10 per cent of Indian companies had exits in the last decade, compared to 20 per cent of their US counterparts. Significant development of exit routes could drive the virtuous cycle of value-creation, says the report.
Of the $3 trillion global enterprise IT and communications spending market, software, including SaaS, constituted $600 billion in 2020, growing at 8 per cent yoy – almost twice as fast as the overall market. While software comprises only 20 per cent of the global market in terms of spend, it drives 47 per cent of the total value-creation across spend segments, thus representing the most attractive segment in terms of enterprise value.
“I’ve always believed that for those of us who have helped pave the way, we owe it to others to pay our learnings forward. When we share knowledge, experience, successes, and even failures, as we do at SaaSBOOMi, we make entrepreneurship more accessible than before,” said Girish Mathrubootham, founder and CEO, Freshworks and founding partner, SaaSBOOMi. Apart from Mathrubootham and Garg, the report also has insights from Ritesh Arora of BrowserStack and Krish Subramanian of Chargebee and VCs Mohit Bhatnagar of Sequoia Capital and Shekhar Kirani of Accel Partners.
"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, Nasscom.