Indian SaaS to have companies that will earn $10 billion revenue, finds Google and Accel

Indian SaaS companies are expected to reach the $10 billion revenue mark in 2025, according to a report released by search major Google and early-stage investor Accel Partners. The report states India has over 500 SaaS startups currently, collectively earning $600 million in revenue. Globally, SaaS is expected to become a $132 billion revenue industry by 2020.

Much of this expected growth can be attributed to the cost advantage that India based SaaS companies leverage on, especially in labour across areas like engineering and sales. Another reason for this growth expectation is the rising adoption of technology, and specifically SaaS, among small and medium businesses (SMBs). These companies are expected to contribute over 75 per cent of the public cloud revenues driving the global SaaS industry. So, SMB SaaS is expected to grow to $76 billion in 2020 and India is expected to capture eight per cent of this market.

However, as the report says, companies will now have to build specific products for different sectors to find a large client base. Shekhar Kirani, Partner at Accel Partners India said,

With sizeable SMB market opportunity, increasingly high quality entrepreneurs, availability of local talent, favourable unit economics and a vibrant VC community in this space we anticipate several billion dollar companies will be created from India in the next decade.

Another reason for growth is the increasing movement to mobile globally. Indian companies have an advantage here as India is already a mobile-first ecnomomy and companies like Freshdesk have launched mobile and app focused SaaS solutions. "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 to become a very strong player in the global SaaS industry,” said Rajan Anandan, VP and Managing Director of Google Southeast Asia and India. While the report suggests that a number of verticals are ripe for SaaS startups to target, Customer Relationship Management, Data Visualisation, Human Resource Management, Marketing, Healthcare and Education are expected to be the largest opportunities at least in the near future.

Here are some of the key findings and projections from the report:

(The Report was compiled by Google and Accel Partners by combining inputs basis primary interviews with SaaS Indian companies across segments, Investors in SaaS, SIs and institutes done in the period (Oct-Dec 2015). The report also includes data from Google India primary research for SMB Consumers targeted to the US conducted in period Jan-Feb 2016) and secondary Research by Zinnov conducted in India. And benchmark business metrics from Accel India SaaS portfolio and Google search trends data for the calendar year 2013, 2014 and 2015.)