The SaaS (software-as-a-service) space in the country has turned action-packed. With the number of unicorns shooting up to 13 from one about three years ago, and high profile exits doubling to 12 in the same time, the SaaS space is the most happening segment of the Indian IT industry now.

The number of SaaS companies has doubled to 8,000-9,000 in 2021 from 4,000-5,000 five years ago.

The aggregate revenues of SaaS players, including the SaaS revenues of regular IT companies, are expected to cross the $30-billion mark by 2025 against $7-8 billion now.

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“Indian SaaS companies are expected to grow at a compounded annual growth rate of over 30 per cent during 2020–25 to double their share in the global SaaS market,” the report said.

“The share of Indian SaaS companies in the global business is expected to grow from 4-5 per cent in 2020 to 8-9 per cent by 2025,” a report on Indian SaaS sector by Bain and Company has said.

In order to support the sudden spurt in the business, the number of employees working for SaaS companies grew to 62,000 in 2021 as against 42,000 in 2019.

Infectious enthusiasm

The enthusiasm is infectious. Dreaming big and encouraged by the successes of companies like Zoho and Freshworks, young techies are quitting jobs to start up their own SaaS companies.

“Over 500 ex-staffers of SaaS companies set up over 250 startups,” the report said.

“The Indian SaaS landscape is maturing rapidly. Over 60 SaaS firms have received Series C+ funding over the past five years. Investments in the SaaS space went up to $4.5 billion in 2021, an increase of 170 per cent from $1.7 billion in 2020,” the report said.

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The top 10 investors constituted 35 per cent of all the investments made in this space during 2019-21.

“The number of companies that raised funds has gone up to 1,300 in 2021 from 700 five years ago. The number of companies that raised late stage investments has gone up to over 60 from 15 during the period,” the report added said.

The report asked SaaS-specific accelerators to support early-stage companies through education, mentorship, and financing. The government should help them in getting procurement of SaaS tools for various departments.

It also wanted the Government to focus on skilling required for the growth of SaaS space, besides simplifying taxation and IPO regulations.

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