Indian SaaS revenues hit $3.5 billion in FY20; top 5 vendors own 33% market share

KEY HIGHLIGHTS:

• Indian SaaS landscape have 1000-plus companies and 6 unicorns
• SaaS funding in India has grown at 15% CAGR  over last 3 years
• 75% of revenues from Indian SaaS players coming from global sales

With over a thousand Software as-a-Service (SaaS) companies -- 150 among them with an annual revenue rate of over $1 million -- India is now aiming at a faster growth than the global SaaS companies. An industry study by NASSCOM with knowledge partners states that India's SaaS companies' revenue has now reached $3.5 billion in FY20, with 75 per cent of the said revenues coming from global sales.  

The report 'Riding the Storm: Towards the Giant India SaaS Opportunity' says the number of  SaaS companies growing in India at a compounded annual growth rate (CAGR) of  30 per cent is nearly one and a half times faster when compared to global SaaS landscape.  While the Indian pure-play SaaS companies are dominating the market, the top five companies account for nearly 33 per cent of the market share. Terming the SaaS companies as one of the emerging growth drivers, Debjani Ghosh, President, NASSCOM says that as a technology industry they have barely scratched the surface when it comes to use cases that can be delivered via SaaS to benefit across sectors. "India today needs greater cross-industry collaborations, supportive government policy, and investment in deep technologies, to further the growth of the SaaS industry exponentially."

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While the SaaS industry in India has been seeing an accelerated growth in the last few years largely led by increased cloud consumption and evolving Software as-a-Service model. The large demand (nearly 75 per cent) for Indian SaaS products comes from global markets. SaaS funding in India is said to have grown by 15 per cent  CAGR over the last three years. With nearly 6 unicorn SaaS start-ups, the number is expected to grow higher by 2025 .

With the global addressable SaaS market expected to be around $400 billion by 2025, Indian SaaS companies  have a big opportunity ahead. While the pure-play Indian SaaS industry is a fraction with revenues of around  $2.5 billion, by 2022 it has the potential to grow by six times and hit revenues of  $13-15 billion, says NASSCOM .

Some of the key recommendations in the report to  realise this growth potential include a strong push for procurement of India SaaS products through changing procurement norms, specific incentives and linkages with Indian MSMEs, creating specialised SaaS focussed accelerators and incubators and promotion of  tier-II and tier-III cities and non-metro locations to develop SaaS companies in India. The report also suggests looking at non-VC funding model requiring to grow the SaaS industry base.