Indian SaaS ecosystem to increase its global market share to 4-5%: Report4th March 2022
While a majority of companies focus on horizontal business software, vertical solutions and innovative infrastructure SaaS plays are also scaling out of India
The software-as-a-service (SaaS) ecosystem in India is expected to grow rapidly and increase its share to 4-5% of the global SaaS market from about 1% currently, translating into a $50-70 billion revenue opportunity by CY30, according to a report by Motilal Oswal Financial Services Ltd.
“SaaS has emerged as one of the biggest disruptors in the global technology industry over the last two decades. It continues to accelerate further as the world rapidly shifts to a cloud-based environment. The covid-19 outbreak exacerbated the push to SaaS, given greater flexibility, functionality, and better remote productivity,” Motilal Oswal said.
Within the SaaS space, Indian companies are now distinguishing themselves, with a long list of firms joining the unicorn club, the report said. While a majority of companies focus on horizontal business software, vertical solutions and innovative infrastructure SaaS plays are also scaling out of India.
According to Motilal Oswal, unlike the technology services industry, SaaS companies are generating meaningful revenue from Indian companies (30% in CY20 as per Zinnov) and have a diverse business model targeting both enterprise and small and medium businesses. “This has resulted in elevated interest from VC/PEs, which have invested over $4.5 billion in the space in CY21, about 3x higher versus a year ago.”
With proven scale and business model, Motilal Oswal expects more SaaS companies to follow Freshworks and opt for a public listing. According to the brokerage firm, in addition to their strong product offerings, Indian SaaS companies have gained from the shift to digital sales due to the travel restrictions imposed to stem the pandemic. “This resulted in increased trials of quality offerings and their strength in pricing and customer service becoming much more visible.”