Indian SaaS Companies' Valuation To Touch $50 Billion By 2025

India has the potential to grab 8 per cent of the global SaaS market estimated to be at $132 billion by 2020

Indian software-as-a-service (SaaS) companies will be valued at $50 billion by 2025, according to a report released by Google and Accel Partners.

The global SaaS market is estimated to be $132 billion in revenue by 2020 primarily driven by the demand from small and medium businesses (SMBs) with India likely to grab 8 per cent of the share to grow to a $10-billion revenue industry by 2025.

"With the demand from SMBs in United States projected to double, and an expected explosion of demand from Europe, Indian startups have the opportunity to grab 8 per cent of this revenue by creating purpose built innovative solutions targeted at SMBs globally," the report said.

Simply put, SaaS is a software licensing and delivery model wherein software is licensed on a subscription basis and is centrally hosted.

Companies provide software as a service to its customers over the Internet, typically on a pay per use model. As per the joint report by Google and Accel, newer pricing models are emerging today such as Outcome Based Pricing (aligned to usage, direct outcome or value-based), Monetizing Network Effects (Free for enterprises, revenue from suppliers to the enterprises. Eg: Zenefits), and Freemium/ Open Source (Free for enterprises, revenue from services and premium products. Eg. Cloudera, mongoDB). Some of the popular SaaS based startups in India include Zoho, Freshdesk, Practo, JusPay, and RecruiterBox.

"Cloud computing is one of the top technology investment trends of this decade with venture funding for purpose-built SaaS solution exceeding $18 billion in the last four years. Indian startups have an edge, as mobility is also becoming a key requirement by SMBs for SaaS. Our startups are already building world-class solutions for the mobile-first users, this strength combined with easy access to global customer base online, will help India become a very strong player in the global SaaS industry," Rajan Anandan, vice president and managing director, Google Southeast Asia and India, said on Friday.

The report states that Indian SaaS businesses can scale rapidly because of its advantages in engineering, inside sales, product management and mobile skill sets.

Customer relationship management, data visualisation, human resource management, marketing, healthcare and education are seen as some of the key areas where large global SaaS companies can emerge out of India.

Google spokespeople told reporters in Bangalore today that there are already 25,000 SaaS-ready engineers in India and this number is expected to grow further to help enable the SaaS startup ecosystem thrive in India, which is already the third largest startup ecosystem in the world.