Ease of Doing Business for MSMEs: While there is a wide appreciation of Indian computer software-as-a-service (SaaS) startups such as Zoho, Freshworks, Druva, Capillary, InMobi, and far more globally, but the nation can have as numerous as 3 SaaS firms with far more than $1 billion in revenues in the coming years. “We talk about the number of companies having greater than $100 million annual recurring revenue (ARR) being 4-5, but my sense would be that within a few years we would have two or three that are over $1 billion in revenues,” Arpan Sheth, Senior Partner, Bain & Company told The Spuzz Online. Sheth leads the firm’s Asia-Pacific technologies, vector, and sophisticated analytics practices along with its private equity and option investor practices in India.
Indian SaaS entities are increasingly tapping into new segments such as little and medium enterprise (SME) and below-penetrated verticals that have been witnessing development in computer software adoption with rising digital penetration and shift from manual processes, according to a report by Bain & Company titled India SaaS Report 2020 released on Tuesday. Zoho, Kissflow, and Freshworks are amongst SaaS firms focusing on SMEs. While Zoho has about 4 lakh shoppers in about 180 nations, Freshworks serves about 2 lakh shoppers in about 150 nations, the report noted.
“SMB-focused SaaS companies are flourishing given the vast and growing SMB market opportunity. SMBs accounted for 40 per cent of global software spend in 2016, and that was up 10 percentage points to 50 per cent in 2019. Indian-heritage SaaS companies like Freshworks, Zoho, Kissflow, and Chargebee have built a strong SMB customer base across a number of countries by tapping into this opportunity,” Prabhav Kashyap, Associate Partner, Bain & Company told The Spuzz Online in an e-mail response. Kashyap is a leader in the company’s private equity practice.
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The Indian heritage SaaS organizations are set to attain $18 billion to $20 billion in income and obtain 7-9 per cent of the international SaaS market place by 2022 from 3-4 per cent in 2019, the report claimed. Moreover, regardless of Covid, SaaS has been a substantial region of investment for investors that have bet far more throughout the pandemic. From 15 per cent of the VC and development equity investments in the very first half of 2019, the share rose to 20 per cent in the very first half of 2020. Also, the quantity of SaaS startups – 4k-5k founded 5 years back — has almost doubled to 7k-8k now.
However, the domestic SaaS market place has traditionally been difficult to monetize due to the fact of reduced awareness and greater cost sensitivity compared to international markets. Despite that “Indian SaaS companies are trying to scale through specific initiatives like investments in market creation via freemium offerings, innovative monetization models and clear articulation of benefits to the customer with a tangible return on investment metrics,” Lalit Reddy, Partner, Bain & Company and its leader in private equity and digital delivery practices told The Spuzz Online.