Google companies

SaaS Enterprises: A Trillion Dollar Opportunity for India

Over the past decade, the rise of software as a service (SaaS) has been transformational. This paradigm shift to an on-demand, cloud-based model has opened up a world of possibilities for ambitious SaaS startups to build iconic global businesses. In this race, Indian SaaS startups have a prime place at the table.

2021 was a landmark year in India, with SaaS startups attracting $4.5 billion in funding. There are now nearly 1,000 funded SaaS companies in India and 3,500 SaaS startups in total. These startups now generate $3 billion in revenue and employ some 40,000 people.

Over the past two years, the pandemic has precipitated the push towards digitization. SaaS now accounts for $600 billion of the $3 trillion global enterprise IT and communications spend market, and is expected to reach $1.3 trillion by 2030. Hybrid work environments are now the norm , and B2B buyer preferences have shifted irrevocably to a digital approach.

Even in the current bearish environment, SaaS startups have always managed to attract significant funding. SaaS was the second segment by number of fundings in the first half of 2022, with more than 90 startups mopping up $1.76 billion. On the contrary, the global crunch in capital availability plays to the strengths of Indian SaaS startups which have traditionally been more capital efficient than their global counterparts.

According to SaaSBOOMi’s August 2021 report, “Shaping India’s SaaS Landscape”, if SaaS vendors can execute to their full potential, they could potentially generate annual revenues of over $50 billion by 2030, representing 4 to 6% of the world market. There could be an even greater opportunity to reframe the SaaS opportunity in India as a non-zero-sum orthogonal proposition.

India as SaaS OS of the World: Under this manifesto, the SaaS opportunity for India has grown from just looking for SaaS startups competing for a small slice of the global pie to establishing itself as a global substrate for SaaS operations for companies operating everywhere. in the world. This is a $1 trillion opportunity for India over the next 10 years.

SaaS calls

India’s rendezvous with a digital destiny can be deconstructed into the following vectors which use India as a basis for:

Digital R&D talent: India has the largest developer pool in the world – over 3 million developers. 55-60% of global IT and operational workflows are already delivered from here. And that base is expanding. India’s tech industry is estimated to have created 450,000 new jobs in fiscal year 2022 and is expected to add an equal or greater number every year for the next five years.

Digital marketing initiatives:
Over 75% of go-to-market initiatives can be executed remotely from India for any organization in the world. The pandemic has accelerated the shift to distance selling, and areas such as the developer tools market lend themselves very well to product-driven growth moves where SaaS companies can excel. Hiring Indian talent for these activities gives the companies better profitability, as it has the advantage of reducing the cost of product development and marketing.

Digital assist functions: Transnational operations and global markets mean that support functions such as finance, human resources and legal operations can be carried out remotely from India. A rich legacy of decades of offshore IT services and BPO capabilities has endowed India with an asymmetric competitive advantage in terms of talent pool and tribal knowledge.

Digital Customer Success: Twilio’s “State of Customer Engagement Report 2022” reveals that digital customer engagement has had a significant impact. It has increased revenue by an average of 70% for companies that have invested in it. Large-scale SaaS startups such as Freshworks and Zoho have successfully demonstrated how to leverage India as a low-cost, high-value customer success base. Labor cost arbitrage in India allows businesses to cost-effectively hire young professionals to complete self-service customer onboarding and success moves.

Digital market:
The rise of digitalization and the emergence of digital rails for many large industries has created an unprecedented market opportunity. Thanks to platforms such as Aadhaar and Unified Payments Interface (UPI), the fintech market in India has overtaken other geographies and is generation by generation more advanced. Similar trends in healthcare (National Health Stack), retail (Open Network for Digital Commerce) and logistics (FASTag) will lead to rapid technology penetration in these large legacy markets.

Rainbow in the cloud

As India’s Internet user base is expected to reach 900 million by 2025, the digital ecosystem has a great opportunity to find a solution for ‘Bharat’ with unique mobile-centric digital solutions. Tech giants such as Amazon, Microsoft and Google have woken up in India. The country is one of the fastest growing markets for public cloud and SaaS companies. Amazon Web Services (AWS) revenue in India is expected to surpass that of Japan and South Korea in the near future.

In a nutshell, the center of the world economy is returning to Asia. While China is a manufacturing superpower, India is becoming a digital superpower. If you are an entrepreneur creating the next big SaaS business all over the world, it would be worth considering India as your SaaS operating system.