According to a report from SaaSBOOMi, India’s SaaS (Software as a Service) firms are about to reach $1 trillion in valuation by 2030. Moreover, they will contribute to nearly half a million job creation in India.
SaaSBOOMi, a community of industry founders and project leaders, in collaboration with McKinsey and Company and NASSCOM, has compiled a report titled ‘Shaping India’s SaaS landscape’. It reflects that SaaS firms generated nearly $2-3 billion of yearly revenue and provides employment opportunities to more than 40,000 people.
It further added –
SaaS firms now contribute about $600 billion to the massive $3 trillion global IT and communications market. The report suggests that the global SaaS market will grow at a pace of 18-20% each year, with more than $500 billion in revenue by 2025.
Key highlights of India’s SaaS landscape
Here are some points to know about the SaaS landscape of this country:
- More than 1,000 SaaS companies are operating in India as of now.
- More than 150 SaaS start-ups have $1 million in ARR (Annual Recurring Revenue).
- The combined revenue of Indian SaaS firms stands at $2.6 billion.
- There has been a total VC investment of more than $4 billion in these companies in the last five years.
Trends that are shaping India’s SaaS scenario
SaaSBOOMi report suggests that the pandemic and subsequent lockdown played a part in the exceptional growth of the Indian SaaS sector.
Government organisations (both state and central), corporations, and educational institutes have rushed towards a digital upgrade to provide their services remotely to their users and consumers.
Here is a list of trends that have been transforming the SaaS market landscape of India:
- There has been a favourable and friendly environment for these SaaS companies of late. This is because these companies have efficiently provided a highly accessible digital market and effective post-sale customer engagement, excellent product management, designs, etc.
- Software has become probably one of the most attractive technology segments. It comes with only 20% of the total tech spending but accounts for nearly 50% of the value creation.
- Indian SaaS start-ups are capable of growing at 10X speed and can draw as much as 3-4X of funding levels.
- The collective growth rate of Indian SaaS companies is about to double as they shift their focus to long term goals instead of immediate profit.
Indian SaaS firms need more investment and better collaboration
To unlock its full potential over the next 10 years, Indian SaaS companies need to triple or quadruple their funding.
Did you know?
This sector received a total venture capital funding of $1.5 billion in 2020.
The SaaSBOOMi report proposes encouragement from different stakeholders of this sector, such as the government, corporates, and investors, to ensure the sector receives adequate funding.
NASSCOM President Debjani Ghosh mentions that increased collaboration between the government and other players is the need of the hour. They need to create awareness about the great potential of the SaaS sector in India.
She suggested awareness programmes arranged by SaaS firms in collaboration with universities to generate the required buzz about this segment.
The Indian SaaS sector is a highly promising one. However, there are certain challenges that respective stakeholders need to recognise and address accordingly. Nevertheless, with better funding, more collaboration, and increased awareness, the SaaS sector will continue to contribute more in terms of employment and GDP.
Frequently Asked Questions
How many SaaS unicorns does India have?
There are 10 SaaS unicorns in India currently.
What is the job creation potential of SaaS sector?
1,50,000 by 2025 and 5,00,000 by 2030.
How many Indian SaaS firms exited via IPO or acquisitions in the last decade?
Only 5-10 per cent of Indian SaaS companies had exits via IPO or acquisitions in the last decade.