Over the last 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 create iconic global businesses. In this race, Indian SaaS startups have a first-class seat 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 overall. These startups now generate $3 billion in revenue and employ some 40,000 people.
Over the last two years, the pandemic has precipitated the push towards digitisation. SaaS now comprises $600 billion of the $3 trillion global enterprise IT and communications spending market, and is expected to be worth $1.3 trillion by 2030. Hybrid work environments are the norm now, and B2B buyer preferences have moved to a digital-first approach irrevocably.
Even in the current bearish environment, SaaS startups have still managed to attract meaningful funding. SaaS was the second-ranked segment in terms of the number of funding during H1 2022, with more than 90 startups mopping up $1.76 billion. If anything, the global tightening of capital availability plays to the strengths of Indian SaaS startups that have traditionally been more capital-efficient than their global counterparts.
According to SaaSBOOMi's August 2021 report, 'Shaping India's SaaS Landscape', if SaaS providers can execute to their full potential, they could potentially generate annual revenues of $50 billion-plus by 2030, representing 4-6% of the global market. There may be an even bigger opportunity to reframe the India SaaS opportunity as an orthogonal non-zero-sum proposition.
India as the SaaS operating system of the world: Under this manifesto, the SaaS opportunity for India is flipped from merely looking at SaaS startups competing for a small piece of the global pie to establishing itself as a global substratum for SaaS operations for companies operating anywhere in the world. This is a $1 trillion opportunity for India within the next 10 years.
SaaS Beckons
India's tryst with a digital destiny can be deconstructed in to the following vectors that use India as a base for:
Digital R&D talent: India has the world's largest pool of developers - more than 3 million developers. 55-60% of global IT and operations workflows are already delivered from here. And this base is becoming broader. India's tech industry reportedly added 450,000 new jobs in FY2022 and is likely to add an equal or higher number each year over the next five years.
Digital go-to-market initiatives: More than 75% of go-to-market initiatives can be run remotely from India for any organisation in the world. The pandemic has accelerated the shift to remote selling, and domains such as the developer tools market lend themselves very well to product-led growth motions that SaaS companies can excel at. Hiring Indian talent for these activities bestows companies with better profitability, as they have an advantage of lower product development and marketing costs.
Read More at https://economictimes.indiatimes.com/opinion/et-commentary/saas-companies-a-trillion-dollar-opportunity-for-india/articleshow/94105479.cms
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