India is predicted to emerge as a world leader in cloud computing within the next eight years, according to a report on the Software-as-a-Service (SaaS) industry in the country, which is anticipated to grow at an accelerated rate in the coming years.
According to projections made in the first edition of Bessemer Venture Partners’ India report titled ‘Rise of the Cloud in India’, the country is predicted to hugely benefit from the global shift of industries towards increased digitisation and cloud-based technologies, so much so that India’s SaaS industry is expected to touch the $50 billion mark by the end of 2030.
With $4.8 billion in venture capital invested there in 2021, nearly three times as much as in 2020, and a stunning six times as much as in 2018, the SaaS market in India has already reached a critical turning point. Increased investment for SaaS firms, similar to that given to U.S. venture-backed companies, has fueled the emergence of new unicorns in the country, according to the report.
The rise is reportedly happening so quickly that in the past three and a half years, India has already gone from having just two SaaS unicorns to about 20. In the first four months of 2022, India alone contributed four new names to this list. The number of new unicorns in the Indian IT business increased by 267 per cent within just one year (2020-21).
In addition, SaaS-based enterprises in the nation have even reported achieving the notable $100 million ARR milestone, with organisations like Zoho, Icertis, Highradius, Browserstack, Druva, Eightfold.ai, Billdesk, and Gainsight continuing to exhibit phenomenal growth in the industry.
Even promisingly, there has been a noticeable increase in the number of early-stage businesses with revenues of at least $10 million. While only about 30 enterprises had revenues exceeding $10 million six years ago, today, that number stands beyond 70, according to the report.
Indian SaaS businesses are even believed to have an edge over their international competitors in terms of efficiency, as Indian businesses continue to draw interest from both international and local public market investors. According to the report, Indian SaaS companies are known to operate at a sales efficiency of 80-100 per cent or greater, even when their annual revenue approaches a high of $100 million. Given that the sector has seen two initial public offerings (IPOs) and a number of merger and acquisition agreements, with valuations reaching as high as $1.1 billion (Gainsight), this is unmistakably indicative of the immense attention that Indian SaaS firms receive from the global market.
With firms like Freshworks, Zoho, Icertis, Gainsight, and Innovacer among some of the well-known names featured in the report, numerous global market leaders and category creators in the segment are predicted to emerge in India in the next years, according to some of the study’s key forecasts. The Indian financial system is also anticipated to undergo a major transformation in the upcoming years due to the widespread use of Aadhar and UPI-based technologies in the nation.
The study also predicts that e-commerce would become widely used in India over the course of the coming decade. In order to provide every pin-code in the city with the same level of efficiency and customer pleasure that these multi-billion dollar marketplaces have trained customers to expect, new technological solutions will emerge in the segment.
Furthermore, for a country known for an active and extremely widespread service sector, especially B2B services, India is expected to witness extensive productisation of its service industries. According to the research, leaders in these industries will embrace cloud software to streamline payments, boost transparency, standardise service delivery, and manage the fragmented supply. Some of the current examples include companies like ExMyB for IT services, SquadStack for sales, and PepperContent for marketing.
Lastly, India is also poised to see a fast digitalisation of its healthcare sector as well, thanks to the emergence of several new software companies, which will help the nation's insurance penetration rate and access to non-traditional forms of healthcare finance rise. IHX, i3 Systems, Healthplix, DocOn, and Remedinet are a few of the firms listed in the research that are currently involved in the same.
With such promising developments in the SaaS industry, and even greater aspirations for the future, it wouldn't be wrong to suggest that the Indian SaaS industry carries great potential to rank among the world's top innovation hubs in the coming decade.
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