There has been a massive change in technology in global and Indian markets toward cloud-based systems. Further, with the experience of the worldwide pandemic of COVID-19, there has been a greater reliance on SaaS.
What is SaaS?
Software as a service (SaaS) is web-based applications or on-demand software available over the internet. Customers access the application via a web browser from a computer with Internet access. The cloud users' can share resources such as storage spaces and processing powers. Users pay a subscription to gain access to the software, eliminating the hassle of setting up. SaaS products include software wherein completed tasks are logged and platforms for video making, payment gateways, and online playlists. Salesforce, Microsoft, Adobe Creative Clouds, and FreshBooks are some leading SaaS companies. SaaS helps by eliminating the need for organizations to install and run applications, thus reducing maintenance, licensing, and installation support. With flexible subscription model payments, automatic updates, scalable usage, and customization SaaS offers full support and even more. Furthermore, as companies adapt to a "work from home" culture, demand for SaaS tools has increased.
As companies head towards accelerating their digital businesses, the total growth of the global SaaS market is constant. SaaS is transforming the ways businesses operate. This is escalated by companies using SaaS to enable hybrid work practices, build infrastructure, and increase system stability. The pandemic has also served as a stimulus for innovation and cloud service uptake. There has been an increased use of SaaS platforms by enterprises to obtain an edge over competitors. SaaS also enables companies to acquire large-scale data to gain market insights. As of 2020, the market size of SaaS was USD 113.82 billion and is expected to grow to USD 716.52 billion by 2028. Major software is now integrating artificial intelligence (AI) to offer advanced security. Microsoft, Adobe, Oracle, IBM, and many more are prominent players globally. They control more than half the market, and with expansion in cloud technologies and AI, they concentrate on the various business approaches to advance SaaS. These significant companies are targeting new regions to increase revenue by collaborating with local companies. The software market is segregated within such areas as:
North America dominates the market with mature cloud services and rapid advancements. Western Europe follows in second. Businesses push for more agile and automated processes to fuel global growth. Organizations have become more successful with the power of automation and embrace this technology fully. The global SaaS market is segmented by application, deployment model, enterprise size, and end user. Examples of applications are customer relationship management, human resource management, supply chain management, healthcare, and IT.
Growth of Global SaaS Market
The growth of global SaaS is 18.2% and is estimated to be valued at USD 68.2 billion. As business operations change, the market even more benefits SaaS. Moreover, flexible options such as SaaS are more feasible with dynamic market conditions and economic uncertainty.
India is expected to emerge as a world leader in SaaS as it grows accelerated. India is benefitting from the shift of industries to digitization and cloud-based technologies. Furthermore, increased investment in SaaS technology has fuelled the growth. The drive will be valued at USD 50 billion by 2030. SaaS-based enterprises such as Zoho, Highradius, and Bill Desk have annual recovering revenue of USD 100 million. Indian businesses draw interest from international and local investors, thus having an edge over global competitors. Indian SaaS companies have received immense attention, with valuations of companies reaching a record high (ex. USD 1.1 billion valuation for company Gainsight). The use of e-commerce also boosts the growth of SaaS and new technology solutions.
Additionally, global companies are proposed to emerge in India. India is known for its widespread sector, and leaders of companies are embracing cloud software for payments, standardized delivery, and managing supply. Furthermore, there is fast digitization to be seen in the healthcare sector, thus helping insurance to rise and other forms of healthcare financially.
Growth in Indian SaaS Market
With more digital workforce and talent, SaaS growth is to be accelerated. Given the pandemic-led remote working, companies have been able to hire from small cities, and the adoption of tech platforms has enabled access to digital technology for all. More notably, SaaS start-ups have made a dent, and with the demand for investing in cloud technology, India is eager to supply. India's SaaS transformation is happening in four ways:
Vertical businesses have seen 100% growth with an increased number of deals. The following are promising companies: horizontal businesses such as artificial intelligence (AI) and human resources tech, horizontal infrastructure software such as cyber security and data management, and vertical business software such as healthcare tech and e-commerce.
Investors and Investments
Continued growth has invited a varied pool of investor interest. SaaS-focused funds are available. Investors are even more active across all stages by seeking to add value by providing growth strategies, expansion, and recruitment. With investors being invested, the India SaaS market will capture 8-9% of the global SaaS market share. As Indian SaaS companies scale, their focus areas are pricing and packaging that serve a broad customer base, entering adjacencies across products and geographies, and setting up effective channel sales to new customer bases.
Improving Capacity in India
Initiatives to focus on improving talent are critical. To keep up with the growing talent, India should focus on training relevant skills while reskilling the existing pool. As its growth is maturing, further advancement is still required. To further strengthen the expansion of SaaS in India, the following should be addressed by each stakeholder: governments should focus on skilling and demand generation, investors should provide outstanding mentorship, founders should build communities for knowledge sharing and learning, and corporates support SaaS with funding, and universities include training in SaaS-relevant skills.
The rise of SaaS has transformed the software industry and the enterprises it serves. As the pace of digitalization increases, SaaS has become the preferred choice. As SaaS is entirely global, it is broad in terms of the industries it reaches out to and fundamentally shifts how technology is happening these days. India is making its mark in the global SaaS market as many companies use SaaS-based technology. With the plethora of experience in global IT, there is more strength. Post pandemic, India has pivoted to a digital go-to-market. Cloud providers such as Microsoft Azure, Google Cloud, and Oracle Cloud are investing in the Indian SaaS market.
With the demand for SaaS products, there are many players in the market. To continue this booming trend of India's SaaS market growth, the companies should focus on customer success, have a solid go-to-market strategy, and hire the right senior professionals. The ecosystem remains robust with strongly funded start-ups and unicorns. Further, expansion is expected with an increase in engineering graduates and Internet users. India seems to be heading toward becoming a global leader in SaaS.