Indian SaaS cos going global

Indian SaaS (software as a service) companies are scaling new heights with each passing quarter. The latest fundraising by cloud data protection and management solutions provider 'Druva' is a case in point. The company which provides services to the likes of NASA, Pfizer, and GameStop among others has raised $147 million in its latest round of funding, which takes the valuation to over $2 billion.

Not only 'Druva', many other Indian SaaS startups including Zenoti, Freshworks, Zoho, Icertis are becoming significant players in the global SaaS market. Though many of them started operations in India, these companies are serving companies across the globe, especially in the all-important US market.

According to global consultancy firm Bain & Co, India has around 7,000 to 8,000 players in this space, which is almost double what it was five years ago. The consultancy firm suggests that Indian-heritage SaaS companies may clock $18 billion to $20 billion in revenue and capture up to 9 per cent share of the global SaaS market by 2022. Similarly, IT industry body Nasscom is of the opinion that the Indian SaaS market is estimated to hit $3.3 billion-$3.4 billion by 2022, which will grow 6-fold by 2030.

Such an optimistic outlook also hinges on the fact that the SaaS adoption has increased manifold during the Covid pandemic period. As enterprises try to reach out to their targeted customers, they are increasingly taking the help of SaaS players to go digital.

This has one distinct advantage. SaaS adoption doesn't demand any upfront cost and enterprises can pay on their usage basis. At a time when cash flow becomes all critical during the pandemic period, there is no better option to get customised solutions on a subscription basis.

Many analysts are of the opinion that though the pandemic will eventually fade away, the process of digitisation seems irreversible. This augurs well for the Indian SaaS providers. Also, the business model of SaaS players is slightly different than other startups. For instance, SaaS companies offer a solution on a subscription basis. So, the cash flow starts from the beginning of operations. Unlike many other startups which burn a lot of cash before becoming profitable, SaaS companies can be breakeven in a short period with healthy cash flow statements.

After Indian IT services companies that continue to dominate the global market, Indian SaaS providers are the next generation companies with a prospect to play a significant role in the global market. This not only helps the Indian engineers in terms of hiring prospects but even the country also gets benefitted from productised software services offerings.

As the technology world gets more productised amid the pandemic, Indian SaaS players are well-placed to cash in the emerging opportunities. In this context, the market regulator Sebi should come up with attractive public offering norms which will allow the Indian SaaS players to list in Indian bourses than going public in foreign bourses. This will enable investors to own shares in these companies with attractive growth prospects.