Projections & Trends for Indian SaaS Startups

India’s SaaS (Software as a Service) market is expected to be valued at $50 billion in the next one decade according to a report released by Google and Accel Partners. The market, which has been led by U.S. till now, is going to see a major shift as Indian SaaS companies are coming up in a big way.

Projections

SaaS is expected to make up for over 75% share of the public cloud revenue thus leading to $132 billion global valuation of this market by 2020. Small and medium businesses (SMBs) are expected to reap the major benefit of this disruption as they adopt more and more SaaS products. These SMBs are expected to reach $76 billion valuation soon. Indian SMBs are pegged to contribute 8% of this revenue by introducing innovative custom-built solutions for such businesses.  There are also some projections showing the demand from US SMBs doubling for such products.

Trends

Cloud computing is, right now, the hot bed of tech investment, and venture funds are rightly investing into purpose-built SaaS. These investments have reached to a tune of $18 billion in just four years. Indian startups have realized the potential that lies ahead. Rajan Anandan, VP and Managing Director, Google Southeast Asia and India, believes that domestic startups have an edge when it comes to building top-notch solutions for mobile users. Also due to the easy access to online global customer base, Indian SaaS startups are proving to be very strong market players.

Drivers of Growth

Global investors are also favouring Indian SaaS startups as they have the required talent, globally viable products and lower cost of production. These are the factors that are attracting big investors in hope of finding the next Infosys or Wipro in this sector.

Recent Investments

This year has been pretty interesting as 82 SaaS Indian startups have secured investments out of which one-third of the investment poured in from global investors. Accel Partners, Google Capital, Sequoia Capital, Blume Ventures and 500 Startups are among the top investors in this field at present. Also, a $10 million venture fund was recently announced by Storm Ventures, headquartered in Silicon Valley. Three other Indian startups also secured funding from SRI Capital; this includes Zuppler, a Pennsylvania-based restaurant software solution provider, with R&D department based out of Delhi, and Yellowdig, a Philadelphia-based company with development center based out of Pune.

Markets and Challenges

But despite all the funding, this market has some challenges of its own. Sashi Reddi, Managing Partner, SRI Capital, believes that in India, focus is more on consumer startups, which leaves enterprise startups struggling in the Indian market. Also, it’s difficult to sell the SaaS services to the international clients from here. This is the reason why almost all the SaaS startups are headquartered offshore,with small teams working on specific aspects in India. Also, selling to Indian corporations is still difficult and as a result the domestic market for SaaS is almost non-existent.

But with big fundings and more exposure coming in, all this is surely changing.

What else can be done to encourage the SaaS market in India? Share your thoughts in our comments section below.

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