Emerging Tech's Role shaping the Future Landscape of SaaS

In an exclusive interview with Ritesh Gupta, Senior Vice President & CTO of Product Engineering Services (PES) at Happiest Minds Technologies, Ritesh is the Senior Vice President & CTO of Product Engineering Services (PES) at Happiest Minds. He is responsible for defining the technology direction for the product engineering business and working closely with practice heads in creating robust offerings that resonate with the market.

We delve into the evolving landscape of the Software as a Service (SaaS) industry in India. With a focus on emerging technologies and strategic insights, Ritesh shares his perspectives on the challenges, opportunities, and future directions for SaaS companies in India. 

In your view, how will emerging technologies like AI, edge computing, and blockchain shape the future landscape of the SaaS industry in India?

The future landscape of the SaaS industry in India is poised for transformation with the implementation and integration of emerging technologies. Artificial Intelligence will scale in personalized experiences, predictive analytics, and automation of routine tasks, fostering more intelligent and efficient SaaS applications. As AI algorithms enable natural language processing and support smart decision-making, businesses will experience heightened levels of user engagement and strategic decision support, making applications more intelligent and competent.

Simultaneously, edge computing will bring about lower latency, optimized bandwidth, and improved security by processing data closer to the source. The integration of this technology will enhance the responsiveness of SaaS applications, particularly crucial for real-time analytics, while also contributing to a more decentralized infrastructure. We are seeing more and more adoption and demand, or, rather, the necessity to have edge computing from a growing complexity perspective.

On the other hand, blockchain, which definitely improves security and trust, introduces intelligent contracts for automation, and decentralized data storage, we see a very slow adoption in SaaS. It has, no doubt, the ability for a leapfrog effect in injecting trust within non-trusted parties. Still, due to scalability challenges, integration complexities, and availability of matured alternatives, we need to wait and watch for the differences it would bring in SaaS.

For established SaaS companies, how do you see your role evolving in the face of industry maturation, and what strategies will be crucial for staying ahead of the curve?

Happiest Minds’ role as a Platform and Digital Business Service provider can play a significant role in the growth of SaaS companies by providing our industry expertise working with various customers in sectors like Industrial, Manufacturing, Healthcare, BFSI, Media & Entertainment, CPG, etc. We bring in strong consulting and technology experience in these industry verticals and provide services starting from Chip to Cloud in the space of design, development, quality assurance, infrastructure management, and security services.

An IT service company like ours can significantly contribute to the growth of a Software as a Service (SaaS) company by offering technical expertise in software development, technology consulting, and infrastructure management. Services such as security and compliance assistance, integration support, quality assurance, and scalability planning enhance the reliability and performance of the SaaS product. Additionally, we can assist with data management, analytics implementation, user experience design, and training programs. This collaborative partnership enables the SaaS company to leverage external support for various aspects of its operations, allowing it to focus on innovation, user satisfaction, and overall business growth.

To the startups in the SaaS space, how do you envision contributing to the next chapter of SaaS innovation in India, and what unique perspectives do you bring to the table?

We have been working with a startup in SaaS areas for many years now and have been a complete digital and engineering arm since then. This includes working very closely with their product team and coming up with enterprise-grade architecture – we handhold the startup throughout its journey, from consulting to infrastructure management and support.

Our R&D team, in collaboration with Industry Vertical heads, continuously works and invests in forward-looking emerging technology with a pure intention of how these technologies would disrupt the SaaS ecosystem. Our newly formed Business Unit in the Gen AI space – GenAI Business Services, purely focuses on consulting and innovation in GenAI, which is the most emerging technology and would disrupt the way SaaS companies operate and do business. Our Security, AI/ML, and Automation CoEs create valuable digital assets for the industry.

In a SaaS startup space, our vision is to play a pivotal role in shaping SaaS innovation in India. Our startup-focused offerings enable us to be considered a trusted partner in technology, which focuses on their business priorities; we build industry-specific solutions and accelerators, which a SaaS company can leverage, giving them time and cost benefits. This enables them to go to the market quickly. We aim to contribute by bringing forth cutting-edge solutions that address industry-specific challenges and streamline business processes. Our unique perspective lies in our commitment to user-centric design, ensuring our products are not only technologically advanced but also intuitively accessible. We prioritize scalability, anticipating the evolving needs of businesses and adapting our solutions accordingly. Collaborating with industry leaders, we are dedicated to fostering a culture of continuous innovation, leveraging emerging technologies to propel the SaaS landscape. Through a combination of agility, adaptability, and a customer-first approach, we aspire to make a lasting impact on the SaaS industry in India, driving efficiency and innovation across diverse sectors.

What challenges and opportunities do you foresee for the SaaS industry in India, and how can stakeholders collaborate to overcome obstacles and foster sustainable growth?

SaaS is the need of today’s changing digital business landscape, and in India, it is at a pivotal juncture with rapid technological advancements and increasing digitalization shaping its trajectory. As the country embraces the digital transformation, there are some challenges that it is encountering:

1. Uneven internet connectivity – The digital divide and uneven internet connectivity in various regions in India continue to be one of the biggest challenges for SaaS companies, and it is significantly limiting the reach of SaaS applications. On the other hand, with the increasing need for bandwidth for edge computing and AI, having faster and more reliable connectivity is of paramount importance.

2. Data privacy and security concerns – With increasing awareness around data privacy and security, not having an established protocol is another big challenge. The recent induction of the Digital Personal Data Protection Act 2023 would help address this issue. However, the way we see it, it is still evolving with ambiguity in some areas and would need time to mature and adapt.

3. Talent shortage – The storage of talent due to increased demand for emerging technologies also creates a challenge. SaaS companies are struggling to get the right talent, though they are doing what is needed to train internal staff for these purposes.

4. Global competition – Considering India is a little late in the whole digitalization game, there are enough and more established players in SaaS areas across the globe. It would take time for Indian SaaS companies to get established to beat the competition.

With challenges come opportunities.

1. Rising tech adoption – Increasing adoption of technology and organizations embracing digital transformation across different industrial sectors presents a significant opportunity for SaaS solutions. New solutions or customizing SaaS solutions after collaborating with the business stakeholders can streamline operations and efficiency.

2. Startup ecosystem – India boasts a lively startup ecosystem characterized by vibrancy. The synergy among established SaaS companies, investors, and startups has the potential to propel innovation. Incubators and accelerators, pivotal in providing support to newcomers, play a crucial role in cultivating an entrepreneurial culture.

3. Industry-specific solutions – India hosts industries in every sector, and with “Atamnirbhar Bharat” initiatives by the government, we see many verticals expanding, like Aviation, Pharma, etc., which will create multifold opportunities for SaaS providers to develop industry-specific solutions. Focusing on industry-specific solutions tailored to the unique needs of sectors like healthcare, finance, logistics, etc., presents a significant opportunity.

4. Creating the right talent – Collaborative efforts between industry, academia, and government can address this by promoting relevant education programs and skill development.

In pursuit of collaborative strategies to handle obstacles in the SaaS industry in India, stakeholders should explore various avenues, such as public-private joint ventures. Bringing together governments, industry leaders, and educational institutions to collectively tackle infrastructure challenges, promote research, and bridge skill gaps. Encouraging the establishment of industry associations is another key strategy facilitated by fostering collaboration, addressing regulatory challenges, promoting ethical standards, and nurturing innovation. Supporting and expanding startups and accelerators emerges as a hands-on approach and would definitely benefit the Indian SaaS industry.

In the context of data security and privacy concerns, how are SaaS companies preparing for and addressing potential challenges to ensure a secure and compliant future for their users?

With increasing data breaches and theft, there is great awareness and seriousness towards data privacy and security by the industry. SaaS companies are taking these issues very seriously, and they are not taking care of the current issues but are investing in future security concerns. Other main areas of focus are to reduce human errors and insider threats, which are the main reasons for data breaches.

1. Privacy by design – Historically, security has always been an afterthought. With changes in data privacy and security threats, SaaS companies have started embedding privacy by design in the development lifecycle from the outset. This approach ensures that privacy and protection are considered part of the design, development, testing, and deployment of the services.

2. Encrypting and secured protocol - SaaS companies are increasingly prioritizing data encryption both in transit and at rest. Utilizing robust encryption algorithms and secure communication protocols like HTTPS ensures that sensitive user data remains protected from unauthorized access during transmission and storage. There have always been advancements toward better encryption algorithms, which are continuously accepted once proven.

3. Security compliance adherence - With increasing awareness towards security and privacy of user data and the evolving landscape of data protection regulations, SaaS companies are proactively adhering to and staying ahead of all required compliances like GDPR, CCPA, DPDP and other regional data protection laws, creating trust in the user community and ensuring their operations and governance align with the highest standards of data privacy.

4. Regular service, IT security audits, and monitoring – SaaS companies have realized that security audits are no longer a one-time activity and need to be done at regular intervals. These intervals are performed not only during the releases but also in the production environment at regular intervals. This is done to identify vulnerabilities and proactively address security threats. There are many commercial tools available that SaaS companies leverage. Lately, the concept of Continuous Threat Exposure Management (CTEM) has helped SaaS companies to stay ahead of any vulnerabilities and implement countermeasures.

5. User awareness – End users also play an important role in data privacy and security. Despite strong governance from SaaS companies in these areas, data and security breaches can also happen from the side of end users, and SaaS companies are investing in educating and making them aware of potential breaches and how to protect them.

6. Data access control – Role-based access control is another factor in protecting the data. First of all, SaaS companies are ensuring only to collect the data that is needed for the services, and if there is critical data, else stringent access controls are enforced, ensuring only required authorized personnel have access to that data. On top of it, wherever it is possible, data are masked.

7. Incident report plan – An incident report plan is a proactive plan and SOP to be followed in case of an incident. This comes into existence after SaaS companies recognize the inevitability of security incidents. SaaS companies have started following very stringent and zero-tolerance policies around this.

8. Transparency and communication – Transparency and communication are essential to create trust with the company. These days, companies are very open about their data and privacy policies – the way data would be stored, encryption policies used, and how the data would be used.

The subscription-based model has been a key feature of SaaS success. How do you foresee pricing models evolving in the future to cater to diverse user needs and market demands?

The pricing strategy for SaaS companies has been evolving for years now. Every SaaS company catering to diverse customers has realized that it cannot be fixed, and it is essential to tailor it to the customers’ needs and usage. Pricing models that have been in existence for long and are constantly modified or customized are fixed, usage-based, feature/tired-based, per-user licenses, and freemium pricing.

We see a strong demand emerging from customers for outcome-based pricing. Outcome or value-based pricing for SaaS companies is a strategic pricing model that directly ties the cost of the software to the measurable outcomes and the value it delivers to the customer. Unlike traditional models, this approach customizes pricing based on specific, quantifiable metrics that reflect the impact on the customer's business, such as increased revenue, cost savings, or efficiency gains. This structure aligns with the interests of both parties in achieving success.

With the emergence of AI, it will have a transformative impact on SaaS service pricing by introducing agility, personalization, and data-driven decision-making. SaaS providers leveraging AI technologies can create more adaptive, competitive, and user-centric pricing models that align with the evolving demands of the market. AI can analyze huge data, including user behavior, competitors’ pricing, and market trends. This can help SaaS companies optimize their pricing model.

With the globalization of businesses, how do you envision SaaS companies adapting to and influencing international markets, and what role might India play in shaping the global SaaS landscape?

SaaS companies adapting to the international market would need to pay attention to localization and cultural sensitivity. SaaS production should cater to the different languages, currencies, and cultural preferences. Global compliances and the law of the land need to be taken care of. They would have to implement most of the compliance and must switch over based on the data center where the product is hosted or the country of the customers and their users. Infrastructure gets into a massive scale, ensuring service availability and providing customer support based on the time zone.

Thought leadership, a culture of innovation and agility are the main ingredients for influencing the international market. Innovation and agility can enable SaaS to set industry standards and steer global trends by consistently introducing new and cutting-edge solutions based on emerging technologies. Establishing themselves as thought leaders by virtue of best practices and industry insights contributes to shaping international standards. SaaS companies these days tend to open source some of their key components and this is primarily done to establish themselves as a technology and innovator brand and engage with the developer community. Partnerships and joint ventures with other well-known global enterprises add to this cause.

India plays a significant role in shaping the SaaS landscape. First and foremost, India’s rich talent pool in technology and development and reputation for delivering cost-effective solutions make it an attractive outsourcing destination for SaaS development and support. India has been evolving as an innovation hub and the growing number of startups contributes to India’s influence. The Indian government and Industry Associations' compliance and policies are more adaptive in making India the most preferred location for any global company to start their GIC. Lastly, India's diverse and inclusive approach to technology solutions, considering the varying needs of its vast population, positions it to develop SaaS offerings that resonate with diverse global markets. The ability to create inclusive solutions contributes to India's influence on a global scale.

The startup ecosystem in India has been vibrant. How can government policies, investment strategies, and industry collaborations foster a conducive environment for SaaS startups to thrive and contribute to the industry's future?

The Government of India has been very focused on fostering a start-up ecosystem in India. They have already implemented multiple policies to create a conducive environment for their growth. Start India initiative, started in 2016, provides multiple benefits, starting from simplifying registration services while handholding startups at every step. Funding support and incentives, allowing to raise funds in the primary market under the SME category and enabling private investors to invest via SEBI-registered AIF funds. The government has been very supportive in providing tax holidays for the 3 years in the first seven years of incorporation. Additionally, international collaborations, initiatives like the Atal Innovation Mission, and programs such as NIDHI demonstrate the government's commitment to nurturing innovation and entrepreneurship in the country.

The Indian government understands the importance of industry collaborations for the success of SaaS startups. The Atal Innovation Mission (AIM) facilitates collaboration between startups, academia, and industry with programs like Atal Incubation Centers (AICs). The Startup India Hub serves as a central platform connecting startups with corporates, investors, and mentors, which aims to help startups set up labs, accelerators, and incubator centers. Additionally, public-private partnerships, schemes like AIM-PRIME, and sector-specific programs such as the National Digital Health Mission (NDHM) promote collaboration and innovation within the startup ecosystem.