SaaS based Startups, the next big thing in Indian IT landscape?

The Lord of the Kings

The software juggernaut that is India, has been ruling the industry since years and expats from the country dominate the silicon valley, including prominent names in the C Suite of major organisations. The industry has also been a significant revenue generator for the country, with exports worth of $147 billion1  in 2015, and has catapulted lives of millions of Indians.

For more than a decade, the industry was ruled by local behemoths like Infosys, Wipro, TCS and foreign majors like Oracle, IBM, SAP. Whilst a set of organisations focussed on the ubiquitous 'Global Delivery Model', a plethora of others focused on building world class software products and the supporting ecosystem.

The Paradigm Shift

However, the startup boom in India is witnessing a new crop of companies emerge and position themselves, not just as a domestic big name but a global force to be reckoned with. On top of the game are the two giants of Indian SaaS bandwagon, Zoho and Freshworks, with over 4000 employees in total and a combined revenue of over USD 350 million. There are currently more than 6100 such firms, capitalizing on the SaaS market, with investments over USD 2 billion, as per market intelligence firm, Tracxn.

So, what is helping these multitudes of SaaS unicorns race ahead and give their traditional IT counterparts a run for their money? Widespread availability of technological talent is one, owing to many top IT executives founding their own ventures, as well as a significant number of expats returning home. Another advantage of a SaaS startup is relatively low entry barrier, due to the pay-as-you-go structure of cloud services. Customers, as they come, bring revenue and a chunk of it goes into payment of the costs incurred.

And lastly, the advent of SaaS model changed the sales landscape of software companies. Gone are the days where client acquisition meant months of endeavours, treating clients to expensive business lunches and multiple rounds of negotiation. Inbound marketing, inside selling, and mass lead generation is the way to go for the new era SaaS startups where sales cycles are much shorter, the target market is larger and the revenue is monthly recurring, so a downside of a month or two is also tolerable for these firms. Add to that the assistance provided by the cutting edge CRM and sales management tools, most of which are successful SaaS applications in their own right! A good part of the sales happens by pure digital marketing activities and the rest is taken care of by the savvy sales agents. Whilst, for most of these companies, the ticket sizes are low, with their target market being the SMEs, the volume makes up for it.

The Road Ahead

The story of the onslaught of Indian SaaS firms is a positive one that is sure to draw many more bright minds to the industry and push forward this growth story. While they also face myriad challenges, the impressive statistic of their growth in clientele and revenue posits a strong argument in favour of this business model, one that is sure to bring up many more successful names in the next few years.


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