Indian SaaS companies have the potential to corner eight per cent of the global small and medium business (SMB) market for SaaS products by 2025, taking their combined valuation to $50 billion, says a joint report by Google & Accel Partners.
The global SMB SaaS market is currently estimated to be $23 billion and Indian companies account for about 2.6 per cent of this market, with a combined annual revenue of around $600 million. By 2025, the global SMB SaaS market is expected to reach $125 billion and India getting $10 billion of this.
SaaS (software as a service) companies, or software companies that follow a web-based delivery model unlike the on-premise software delivery model, are fast becoming popular as clients need not invest in extensive hardware to host the software. Remote access via web to the software applications and data also allows clients to pay on monthly or annual subscription basis.
“Cloud computing is one of the top technology investment trends of this decade with venture funding for purpose-built SaaS solution exceeding $18 billion in the last four years,” said Rajan Anandan, VP and managing director, Google Southeast Asia & India. “Indian startups have an edge, as mobility is also becoming a key requirement of SMBs for SaaS. “Our startups are already building world class solutions for the mobile first users. This strength combined with easy access to global customer base online will help India to become a very strong player in the global SaaS industry,” he added.
“We’re already seeing many Indian SaaS startups creating world-class products successfully for global SMB market. With sizable SMB market opportunity, increasingly high quality entrepreneurs, availability of local talent, favourable unit economics and a vibrant VC community in this space, we anticipate several billion dollar companies will be created from India in the next decade,” said Shekhar Kirani, partner at Accel India.
Out of 125 companies that Accel has funded in India, 25 are SaaS companies, he said. Of the four companies that Google Capital has funded in India, one is a SaaS company. “Money is not a challenge. There is enough money for good quality product companies,” said Kirani who handles enterprise IT investments at Accel India. “Many SaaS startups have scaled without taking VC money but some of them would require funding for building brands and marketing especially when you go to a more complex and advanced market,” he said.
India is estimated to have around 500 SaaS startups and emerging companies. Zoho, Freshdesk, Practo, Capillary, Mobstac are some of the notable ones. While most of the SaaS companies initially focused on customer management solutions, the domain focus of companies is expanding over the years, according to Anandan.
The report notes a number of factors including a vast talent pool that makes Indian ecosystem ready for product-driven SaaS founders. It notes that India has 36,000 product managers with background and experience in SaaS against 1,74,000 in the US. The number of such product managers in India is projected to touch 68,000 by 2020. Similarly, India has around 25,000 SaaS-ready software developers while another 100,000 engineers with necessary skill sets are available in the market.
The report combined inputs from primary interviews with SaaS Indian companies across segments, investors in SaaS, system integrators and institutes conducted during October to December. The report also includes data from Google India primary research for SMB consumers targeted to the US conducted in period January-February 2016, secondary research by Zinnov conducted in India and benchmark business metrics from Accel India SaaS portfolio and Google search trends data for the calendar year 2013, 2014 and 2015, said a release. Leave Your Comment