SaaS startups catching up
Rising interest of investors on B2B startups as emerging space offering higher RoI
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- Migrating from services, maintenance segments
- India is home to over 1,000 SaaS cos today
- Over 13 unicorns (valuation of $1 bn) in the SaaS space
- Indian SaaS segment may reach $75-bn size by 2025
- Freshworks is the first Indian software maker to list on the Nasdaq
- It raised $1.03 bn in its initial public offering, recording a mcap of $10.13 bn
Bengaluru: Indian technology industry is slowly moving from services and maintenance space to developing cutting-edge software products, an area Indian IT industry has traditionally lagged in for the last two decades. According to industry experts, higher number of SaaS (Software as a Service) companies will fill this void with strengthening of this trend next year.
Given the growth of SaaS market globally, investors' interest on B2B (business2business) SaaS startups is also growing.
"Of late, we see rising interest of investors' on B2B startups because the upfront investment is low and return on investment remains high," V Balakrishnan, cofounder & chairman of Exfinity Venture Partners and former CFO of Infosys, told BizzBuzz.
As per estimates, India is home to more than 1,000 SaaS companies today. According to a report by investment firm Chiratae Ventures and consulting firm Zinnov, the Indian SaaS segment has the potential to clock a total turnover of $75 billion by 2025.
Currently, the country is home to more than 13 unicorns (startups with a valuation of $1 billion) in the SaaS companies space. Zoho, Freshworks, Postman, BrowserStack, Icertis, Zenoti, Chargebee, MindTickle, Druva, HighRadius are those SaaS companies with more than $1 billion valuations among others.
This year also saw listing of Freshworks, which became the first Indian software maker to list on the Nasdaq by raising over $1.03 billion in its initial public offering, recording a market capitalisation of $10.13 billion.
"Interest on SaaS startup is definitely growing. Given the tech talent availability and the prowess in information technology space, the country will see many more startups coming in SaaS-based offerings in the coming year," said an analyst. Indian SaaS companies are poised to reach $30 billion in revenue, capturing 8 to 9 per cent share of the global SaaS market by 2025, according to a new report by Bain & Company. Currently, the country has the third largest SaaS ecosystem globally, after USA and China.
Given the growth of SaaS market globally, many traditional IT services companies are also betting big on internet products space. For instance, HCL Technologies has heavily invested in the P&P (product & platform) side of business over the years. It acquired select IP products from IBM for $1.8 billion in 2018, making it one of the biggest investments by any Indian IT firms ever in this space. It has also set up a new business unit called HCL Software, bringing all the IBM intellectual property (IP) partnerships and acquisitions under the division.
Similarly, other IT biggies and mid-tier IT & engineering services firms have established products in the market and are also developing new platforms for customers.
