Indian SaaS to reach USD $ 100 Bn in revenues by 2026: Report

Venture Capital investments will continue to flow into SaaS companies and is projected to touch $6.5 Bn, a 55% increase over last year’s investments of $4.2 Bn.

The Indian SaaS juggernaut is experiencing a ‘coming-of-age’ moment, with an incredible bull run that has firmly anchored its position on the global stage. The SaaS industry is set to clock in a massive USD $ 100 Bn in revenues by 2026. This was underscored by the 2022 edition of the Chiratae-Zinnov India SaaS report titled, “India SaaS - Punching Through the Global Pecking Order.” As the industry has matured, profitability has become a realistic milestone for SaaS companies, and they have cracked the Enterprise conundrum with over 40% revenue contribution. On the global stage, India is gearing to supersede China as the second largest SaaS nation in the next few years.

The report identifies the key attributes that have accelerated the success of the SaaS industry – ‘SPARK’ – Supportive Policies, Proven Global Caliber, Abundant Liquidity, Rearing Domestic Talent, and Kindled Exit Options. Today, leading SaaS firms have been at the forefront of localizing innovation by putting robust engineering and product teams in the top markets that they are catering to. The focus for the firms is to capitalize on the overall value delivered to consumers, thus improving their propensity to pay.

The early SaaS companies are attracting unicorn valuations and also successfully listing on the public markets. These successes, coupled with stronger fundamentals and the path to profitability, are making SaaS companies in India an attractive investment theme. The industry aims to attract a strong private capital infusion of close to USD $ 6.5 Bn in the coming year alone, notes the report.

Key findings on the year gone by

1. Indian SaaS witnessed massive growth at a ~55% CAGR in 2021, with revenues well-poised to cross USD $ 100 Bn by 2026
2. The next wave of digital talent is expected from tier-2 and tier-3 cities; a vast pool of ~3 Mn+ digitally skilled workforce will be the perfect munition for SaaS companies to scale up in the coming years
3. The tremendous growth in the sector as well as the significant reduction in the time to achieve unicorn status have created ~90% of all SaaS unicorns in the last four years alone, with the potential for many more in the offing, thus adding to a large pool of Soonicorns
4. Post surpassing UK this year in the number of SaaS unicorns, India is all set to leapfrog China and become the 2^nd largest SaaS nation by 2026
5. The various pro start-up policies will play a key role in attracting more founders and investors.

On the launch of this report, Sudhir Sethi, Founder and Chairman, Chiratae Ventures, stated, “India is a global SaaS leader, and Chiratae Ventures has been fortunate to be at the center of this surging momentum, with over 35 SaaS companies in our portfolio like Uniphore, which recently raised $400 Mn, and others like Pixis, Hevo Data, Healthplix, CropIn, Pando, Deepfence, and Squadcast which are valued over $3.5 Bn and last year overall raised USD $ 600 Mn. Chiratae predicts that investments in Indian SaaS will continue to grow at a massive pace with the revenue poised to cross USD $ 100 Bn by 2026.”

Pari Natarajan, CEO, Zinnov, said, “2021 was a watershed year for Indian SaaS – including exponential valuations, successful IPO debuts, a vast influx of VC investments, and an unprecedented number of unicorns. Not only have Indian SaaS companies come of age, but they have also been at the forefront of creating new for India and new for the world products, led by visionary founders and a critical mass of engineering and product teams serving this purpose. All this has firmly put Indian SaaS on the global stage, and on the path of crossing the milestone of USD $100 Bn in revenue by 2026. In fact, India is fast emerging as a clear leader in SaaS, and will supersede China to become the second largest SaaS nation in the next few years.”

The report identifies Cloud Security, Cloud-Native Enablers, Hyper Intelligent Automation, Web3, and Verticalized solutions as key areas of interest for investors in 2022 and beyond.