In July, Indian trade association NASSCOM revealed that the country's SaaS revenue reached $3.5 billion. The trade body added that of the total revenue reported by Indian SaaS companies, 75% of it was achieved through global sales.
The report, titled “Riding the Storm: Towards the Giant India SaaS Opportunity," claims that India can become a global hub for SaaS by 2025 by strengthening the ecosystem that includes a strong push from the government, access to a strong funding pipeline, and focus on building SaaS skills.
Now, according to a new report by Bain & Co, Indian SaaS companies are set to reach $18-20 billion in revenue and capture 7-9% share of the global SaaS market by 2022.
SaaS firms such as Zoho, Freshworks, Druva, and Icertis have already burst through the $100 million annual recurring revenue (ARR) mark, with a slew of companies slated to follow suit over the next 12 to 18 months.
"Indian SaaS companies have distinct competitive advantages over their global peers; they have access to a wide pool of skilled talent base including over 100K SaaS developers, significantly lower (75-85%) personnel costs compared to developed countries for similar talent in sales and development, and flexible models like around-the-clock service with a trained service workforce from our IT and BPO industries,” said Aditya Shukla, Partner at Bain & Company and co-author of the report.
So, what is behind this sudden surge? One reason why India is fast-tracked to become a SaaS leader is the Indian Institute of Technology, which is credited for creating the world’s largest technical talent pool. This is also what birthed the Indian IT services industry.
Though, that goes without acknowledging that the industry is guided by top venture capital leaders and technology businesses in the U.S. and other leading regions. But first-generation founders including Zoho's Sridhar Vembu and Freshwork's Girish Mathrubootham have also played a pivotal role in this transformation. They’ve built communities of up-and-coming entrepreneurs, resulting in the development of many new ventures and immense job creation.
Indian SaaS firms raised around $2.10 billion in funding between January and October 2020 compared to $1.70 billion in 2019, according to data from Tracxn. Top fund-raising rounds include Postman ($150 million), Freshworks ($250 million), High Radius ($125 million) and digital apps like Pine Labs ($85 million) and Khatabook ($60 million).
The secret sauce that’s lent itself to such amazing growth seems to be none other than the acceleration of digital transformation. Because of digitization, what would have taken half a decade is now being achieved in a matter of months. And what was slated as an eventual emergence onto the global stage for India is right around the corner.