According to a report by Motilal Oswal Financial Services Ltd, the software-as-a-service (SaaS) ecosystem in India is predicted to grow fast and raise its share of the global SaaS market to 4-5% by CY30, up from about 1% currently, translating into a $50-70 billion revenue opportunity.
“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.
According to the report, Indian companies now distinguish themselves in the SaaS area, with a long list of companies joining the unicorn club. While most businesses focus on horizontal business software, vertical solutions, and innovative infrastructure, SaaS businesses are growing in India.
Unlike the technology services market, according to Motilal Oswal, SaaS companies generate significant revenue from Indian enterprises (30% in CY20, according to Zinnov) and have a broad business strategy that targets both corporates and small-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.”
Motilal Oswal predicts more SaaS companies to follow Freshworks’ lead and opt for a public listing due to their proven scalability and business model. According to the brokerage business, Indian SaaS companies have benefited from the transition to digital sales due to the travel restrictions implemented to combat the pandemic and robust product offerings.
“This resulted in increased trials of quality offerings and their strength in pricing and customer service becoming much more visible,” Motilal Oswal added.