Posted by New Delhi: India SaaS market revenue reached $3.5 billion as of FY2020. With 75% of this revenue coming from global sales, the India SaaS market is growing at 30% CAGR, according to a new Nasscom report in partnership with SaaSBOOMi and Zinnov.
The India SaaS market is growing 1.5 times faster compared to global SaaS landscape, with the dominance of Indian pure-play vendors. In fact, the top five vendors account around 33% of the SaaS market share, according to the findings of the report “Riding the Storm: Towards the Giant India SaaS Opportunity” released on Thursday.
“It is phenomenal to see SaaS emerging as a key growth driver for India. As a technology industry, we have barely scratched the surface when it comes to use cases that can be delivered via SaaS to benefit across sectors,” said Debjani Ghosh, President – NASSCOM.
“India today needs greater cross-industry collaborations, supportive government policy, and investment in deep technologies, to further the growth of the SaaS industry exponentially,” added Ghosh.
India SaaS (Software-as-a-Service) market’s growth is driven by rise in cloud consumption, need for scalability and digital technology adoption.
The SaaS market globally was valued $100 billion in 2019 and from a geographical point of view, the Americas are the highest SaaS adopters accounting for almost 60% of the market. The US also accounts for more than 70% of global SaaS funding.
The SaaS industry in India has seen accelerated growth in the past couple of years. 75% of the demand for Indian SaaS products are coming from overseas markets.
Burgeoning startup landscape and its digital adoption are among the key contributors to the growing SaaS adoption in India. With six SaaS unicorns in India as of 2020 and many more are expected by 2025.
The India SaaS industry is also seeing an increase in investment sentiments from key Indian and global investors. SaaS funding in India has grown by 15% CAGR over the last 3 years.
The Indian SaaS industry today has more than 1,000 companies with 150+ companies generating an ARR over a million dollar. Chennai has emerged as the “SaaS capital” of India, generating $1billion plus in revenue. India’s top IT services companies are also building products and platforms that leverage the SaaS model.
India, today is a testbed for innovation with a focus on digital and deep tech adoption. Its global success in the SaaS landscape is largely attributed to a large skilled talent pool, competitive pricing as compared to European and American markets, and a strong ecosystem. India counts for more than 3 million software developers and 100,000 SaaS developers as of 2019.
By 2025, the global addressable market for SaaS will be around $400 billion as per estimates. To tap this huge market, Indian SaaS companies need to build on their strategic playbook, which includes ensuring business continuity during times like COVID-19, enhancing its existing value proposition, identifying growth opportunities, and customize GTM strategies.
By 2025, the pure-play India SaaS industry currently at $2.5 billion revenues, has the potential to grow to $13-15 billion with a 6x growth. The study recommends certain immediate measures that can be implemented to boost entrepreneurship, talent, market access, intellectual property and ecosystem support to realize this growth potential. These include :
- Strong push for procurement of India SaaS products through changing procurement norms, specific incentives and linkages with Indian MSMEs for their digitalisation journey.
- Increase focus on Design Thinking & Product Management across universities and making it a part of formal curriculum
- Build India’s brand as a ‘Global SaaS hub’ through marketing, visibility and trust
- Building a non-VC funding model requiring to grow current SaaS industry base
- Creating specialized SaaS focused accelerators & incubators and promote tier-II/III and non-metro locations to develop SaaS companies in India
NASSCOM through its Product Council will continue to work with the Indian SaaS ecosystem through its key pillars of deeptech, skill development, mentorship and evangelisation.