India Saas Space to Hit $100 Billion by Fy26: Report | Bangalore News
This is three times more than the estimate made by the consulting firm Bain & Company in December. Bain said revenue would reach $30 billion by 2025, which he said would represent 8-9% of the global SaaS market.
India is transforming into a SaaS powerhouse, helping transform businesses by creating software that can be used on-demand and subscription-based. India is estimated to have 1,150 SaaS companies, up from around 500 in 2015. The new report says continued momentum in creating SaaS unicorns will propel India to overtake China and become the second largest SaaS nation in the world after the United States. India has 17 SaaS unicorns including Amagi, BrowserStack, Hasura and Uniphore. Zoho is a very successful SaaS company, but it hasn’t taken any external funding and so no rating is attached to it. Freshworks debuted on the Nasdaq last year, but its share price has since fallen nearly 60%.
Praveen Bhadada, Managing Partner at Zinnov, said, “Indian-origin SaaS companies have been around for 15 years. Over the past two years, they’ve brought us to a point where visibility has increased dramatically. India will make a significant contribution to the SaaS ecosystem which will grow to around $300-400 billion in the next few years.”
He said that as enterprises embrace the cloud, the velocity of investment has increased significantly, which benefits deep tech companies. “We are seeing an acceleration post-pandemic as the quality of products and founders has improved dramatically,” he said.
Venture capital investments in SaaS companies are expected to hit $6.5 billion in 2022, a 55% increase from last year’s investments of $4.2 billion, according to the report.
The report identifies cloud security, cloud native technologies, hyper-intelligent automation and Web3 as some of the areas seeing increased activity. The next wave of digital talent is expected from Tier 2 and Tier 3 cities and a large pool of 3 million skilled digital workforce will be an integral part of India’s SaaS story.
Venkatesh Peddi, MD of Chiratae Ventures, said the SaaS ecosystem has increasingly matured over the past few years. “We’ve seen many companies register over $25-30 million in average recurring revenue. SaaS companies need less capital to reach value creation milestones. The nature of the SaaS business is predictable and increases profitability. Some of the recent success stories have attracted existing and new investors to the Indian SaaS space,” he said.
Key Performance Indicators (KPIs) in the SaaS space have changed depending on the stage at which businesses are. Some of the metrics include Net Promoter Score (NPS), Deal Predictability Rate, Sales Qualified Leads, and Monthly Active Users.