Over 80% of the SaaS promoters who contributed to the report feel there is the need to build a robust talent pool
50% of SaaS providers feel driving greater awareness for SaaS products continues to be a pre-requisite for customer acquisition
Bengaluru, NFAPost: The Indian IT sector continues to charge ahead on its trajectory of growth and transformation, with SaaS setting the stage for the next wave of disruption, cites the study by EY and CII titled “India: The next global SaaS capital”.
India is home to about 100+ unicorns across different segments with an accelerated pace of entrepreneurship and is rapidly emerging as a hub for SaaS (software-as-a-service) start-ups.
Based on in-depth interviews with 50 SaaS promoters and funders from early stage to Series E and beyond, the study highlights operational characteristics owing to which the Indian SaaS industry is growing at an accelerated pace. It highlights the key factors that are serving as growth catalysts and outlines the areas that need attention.
While India is poised to become the global SaaS capital over the next few years, mainly driven by Small and Medium Businesses with a focus on large enterprises, SaaS companies in the SMB market are structured very differently from those catering to the enterprise market.
Although digital maturity continues to evolve across the global and Indian mid-market segment, 50% of SaaS providers interviewed citied that driving higher awareness for SaaS products continues to be a pre-requisite for customer acquisition.
SaaS providers are also doubling down on their customer acquisition, retention, and success strategies by upselling and cross selling to existing customers. To enhance customer maturity levels, large delivery teams are being deployed to onboard, train and support customers throughout the product life cycle.
One-third of the SaaS providers are being increasingly cautious with their go-to-market strategy and mainly targeting niche segments to acquire marquee clients by understanding new digital buying preferences of the customers, following a digital-first approach and offering innovative pricing models.
The study also points towards the need for skill development in areas like product management and design to cater to the growing talent demand in the SaaS industry.
Today, the country’s IT industry is at a similar inflection point where there is a need to focus on skills around product management and design to cater to the growing talent demand in the SaaS industry. Over 80% of the SaaS promoters who contributed to the report feel there is the need to build a robust talent pool of product managers, architects, designers, and emerging technology specialists to overcome the supply-demand gap in the industry.
EY India Technology Sector Leader Nitin Bhatt said India can build world-class SaaS companies is now firmly established.
“Macro-economic environment notwithstanding, the funding activity in the first two quarters of this year surpassed the funding activity in 2021 – which was a breakout year with over $4.3 billion in funding for SaaS start-ups. As entrepreneurs double down on scaling their ventures, they would do well to sharpen the focus on account centricity, customer success and partner with educational institutions and the government to build a SaaS talent pipeline and continue investing in product functionality and innovation,” said EY India Technology Sector Leader Nitin Bhatt.
The large consumer base in India, coupled with a technology–first mindset is paving way for the emergence of consumer-focused SaaS solutions as adoption levels continue to rise. Here are some data points covered in the study based on secondary research (sources available in the report):
Indian SaaS market is expected to grow multi-fold by 2025, accounting for almost 7 to10% of the global SaaS market from 2 to 4% at present
India now has 18 SaaS unicorns as compared to one in 2018, with India being the third largest SaaS ecosystem globally, after USA and China
The number of SAAS companies in India have more than doubled in 2021 as compared to 2019 and the funding too increased from $2.6b in 2019 to $6b in 2021
The fact that the Indian government also acknowledges SaaS as a major pillar in supporting its vision for Digital India further strengthens the credibility of Indian SaaS companies. The Government of India (GoI) has adopted SaaS solutions to drive e-governance initiatives and further promote the use of digital channels in the country.
For India to reach its goal of a US$5 trillion economy, Ministry of Electronics and Information Technology Joint Secretary Bhuvensh Kumar said the digital economy will play a large part contributing to 20% of the total economy.
“To achieve the vision of $1 trillion digital economy in the next three to five years, we will need a growth rate of almost 12-14%… and IT models such as SaaS have the potential to power such kind of growth,” said Ministry of Electronics and Information Technology Joint Secretary Bhuvensh Kumar.
According to the study, last year in October 2021, India’s monthly UPI transactions crossed US$100 billion for the first time, and yet again in December 2021, they scaled a new peak.11 In 2015, the Ministry of Electronics and Information Technology launched ‘DigiLocker’ to enable secure access to documents on the go. More recently, the government developed cloud-based apps CoWin and Aarogya Setu to streamline the vaccination process and identify COVID-19 hotspots.
