Software-as-a-Service is one of the most important sectors in tech today. While its transformative potential was quite clear before the pandemic, the sudden pivot to distributed workforces caused interest in SaaS products to skyrocket as medium and large enterprises embraced digital and remote sales processes, significantly expanding their utility.
This phenomenon is global, but India in particular has the opportunity to take its SaaS momentum to the next level. The Indian SaaS industry is projected to generate revenue of $50 billion to $70 billion and win 4%-6% of the global SaaS market by 2030, creating as much as $1 trillion in value, according to a report by SaaSBOOMi and McKinsey.
There are certain important long-term trends that are fueling this expansion.
The rise of Indian SaaS unicorns
The Indian SaaS community has seen a flurry of innovation and success. Entrepreneurs in India have founded about a thousand funded SaaS companies in the last few years, doubling the rate from five years ago and creating several unicorns in the process. Together, these companies generate $2 billion to $3 billion in total revenues and represent approximately 1% of the global SaaS market, according to SaaSBOOMi and McKinsey.
These firms are diverse in terms of the clients they serve and the problems they solve, but several garnered global attention during the pandemic by enabling flexibility for newly remote workers. Zoho helped streamline this pivot by providing sales teams with apps for collateral, videos and demos; Freshworks offered businesses a seamless customer experience platform, and Eka extended its cloud platform to unify workflows from procurement to payments for the CFO office.
Other SaaS firms stayed busy in other ways. Over the course of the pandemic, ten new unicorns emerged: Postman, Zenoti, Innovacer, Highradius, Chargebee and Browserstack, Mindtickle, Byju, UpGrad and Unacademy. There were also several instances of substantial venture funding, including a $150 million deal for Postman, bringing the total amount raised by the Indian SaaS community in 2020 to around $1.5 billion, four times the investment in 2018.
India’s path to leadership
While the Indian SaaS community has made admirable progress in recent years, there are several key growth drivers that could lead to as much as $1 trillion in revenue by 2030. They include:
The global pivot to digital go-to-market
The number of enterprises that are comfortable with assessing products and making business decisions via Zoom is increasing rapidly. This embrace of digital go-to-market fundamentally levels the playing field for Indian companies in terms of access to customers and end-markets.