Why India Will Become The SaaS Hotbed Of Tomorrow

by Prasanna Krishnamoorthy, partner at Upekkha

Just as Information Technology (IT) services transformed India in the 1990s, Software as a Service (SaaS) will dramatically shift the nation in the 2020s. All the ingredients for Indian SaaS dominance are here: From producing some of the world’s best developers to competing on cost and producing quality products of global standard.

Only one decade ago, SaaS products accounted for less than five percent of software. Today, more than one-quarter of all software revenue is derived from the SaaS model, and it is growing twice as fast as traditional software growth.

This is great news for India as all signs point to future domination in the sector. Cloud servers mean solutions can be deployed from anywhere on earth, while monthly payments ensure continual capital. Let’s explore why India is set to grow in the SaaS sector, what it means for both employers and employees and what the rest of the world needs to know about it.

Take it back to the 90s.

What India and IT services were in 1990, India and SaaS are today in 2019. Asserting India as the SaaS hotbed of tomorrow is no small statement, but take a step back to understand why this is the case. Information Technology services in the South Asian nation barely existed at the turn of the final decade of the 20th century. All it took was one, admittedly massive, black swan event to expand the sector exponentially.

That catalyst was the Millenium bug. Companies all over the world raced to debug and reprogram their computer systems before the fateful date – with the Guardian reporting much of the $600 billion fix found “its way to the south Indian city [of Hyderabad].” Every software company settled massive budgets to expand and cover any particular bugs. Time was short and the work laborious, meaning that the majority of jobs went to India to save on costs. The proof is in the numbers: IT increased its contribution to India’s GDP from 1.2 percent in 1998 to 7.7 percent in 2017.

This event prompted a massive cultural and employment shift within the country. While Indian developers had previously found themselves at the bottom of the pecking order, they are now often the top choice for software roles. Indians are inventive and with a natural liking for building software – and essentially evolving from the mason to the architect of the software houses being built. The Y2K and its resulting impact has transformed the nation into the product builders, managers and marketers – and what is to say the same thing cannot happen with SaaS?

Employers and employers.

Better communication and outsourcing options further the case for India to take over the growing SaaS market. Neither marketing nor support need to be where the customer is, so it is possible for the entire software and support strategy to be built and sold from India. In fact, designing everything from India is the new trend – and similar to what we have seen with the IT explosion, SaaS is only on the up.

Today, the software industry is worth $600 billion worldwide, with $150 billion in SaaS. An estimated 70 percent of this is likely to become SaaS in the next 10 years, with 10 percent of the global total to originate from India. This will equate to roughly $100 billion into the national economy – and a whole lot of benefits for employers and employees.

Some industry insiders expect that there will be 10,000 SaaS startups from India in the coming decade, which means thousands upon thousands of new roles. Thus, Indian workers will take on roles that simply did not exist before. Customer success manager, team leaders, specialist developers and more will be required – further strengthening the country’s prowess in IT and development.

Although prompted by an unpredictable event, SaaS is the closest cousin of what transpired with Indian IT in the 1990s. In fact, the rise of Indian SaaS is already starting to take place: Zoho is being touted as the Indian equivalent of Salesforce. The truth is that the recipe for another computing boom is here, all that is required is the spark.

What to expect.

If history has taught us anything with Indian IT, it is to expect the unexpected. Nobody could have predicted the Y2K scare and yet its impact has been wide-ranging for more than 20 years. A black swan event is impossible to predict – but they do happen and should never be considered unlikely.

The best advice for anybody right now is to prepare. The growth of SaaS is exponential and macro trends only point to continued dominance. Perhaps the tide has already started to turn: Tiger Global Management, the world’s top Unicorn investor, was tipped to invest in as many as five SaaS companies in India in May alone.

There is no escaping that people are moving from buying their own software to renting it. Therefore, software does not need to be bought at one expensive price, but rather rented in affordable monthly installments reducing the friction to use SaaS. Furthermore, skilled software development teams can be created outside of the Silicon Valley, providing the same result at one-tenth of the price.

It should be clear that companies need to be looking at India right now before it is too late. The talent pool and cost advantage is undeniable – and will be almost unattainable once the balance shifts and India becomes the global trendsetter in SaaS. While these may sound like a reading of the tea leaves, they are based on positive forecasts and recent history. The advice to global SaaS is clear: Corporates must climb aboard to the India SaaS bandwagon before it is too late.

 

Prasanna Krishnamoorthy is a partner at Upekkha, a catalyst that helps founders build Value SaaS business where business grows fast in the most capital-efficient way.

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