India, Asia’s third largest economy, is joining the league of global players staking huge investments in digital infrastructure, providing software-as-a-service, or SaaS, by coming up with a new generation of software companies like ‘Zoom’ and ‘Slack.’
According to a KPMG survey, owing to the COVID-19 pandemic, businesses spent an extra $15 billion per week last year on tech as they scrambled to create safe remote working environments, as reported by CNN.
SaaS companies provide web-based applications that take care of everything from how secure the software is to how well it performs. Some of the world’s most well-known SaaS companies include Zoom, SAP Concur and Salesforce, the American behemoth that owns workplace messaging app Slack.
India’s software-as-a-service industry could be worth $1 trillion in value by 2030 and create nearly half a million new jobs, according to a recent report compiled by consulting firm McKinsey & Co. and SaaSBoomi, a community of industry leaders.
There are nearly a thousand such companies in India, of which 10 are unicorns, or startups worth at least $1 billion, the report said.
“This can be as big an opportunity as the IT services industry was in the 90s,” said Girish Mathrubootham, CEO of Freshworks, and India’s best-known SaaS Company. It filed for an IPO last month, joining a string of other major Indian tech unicorns that are going public this year.
Freshworks was founded more than a decade ago in the southern Indian city of Chennai. Like Salesforce, it provides software to help companies manage relations with their customers. It’s also India’s oldest unicorn in the sector, having raised funds from investors such as Tiger Global and Accel, and has more than 50,000 customers. The company was last valued at $3.5 billion in a 2019 funding round, according to data firm Tracxn.
While India is yet a small player in the global SaaS market, investors say the country could eventually dominate the sector because of two things: its vast pool of English-speaking developers, and the relatively low cost of hiring them.