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TechSparks 2017: SaaS is now moving to verticals to script success stories across India

Vishal Krishna
4th Aug 2017
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Indian startups are poised to benefit as a report by Accel Partners and Google says SaaS will contribute to more than 75 percent of public cloud revenues, driving the global SaaS industry to $132 billion revenue by 2020.

Sridhar Vembu, the Co-founder of Zoho, recently shook the world of cloud services with an aggressive pricing of Rs 1,000 per month per person for a suite of apps called ZohoOne. The suite makes available more than 38 apps and is designed to support a company grow from a startup to large business. By doing so Sridhar wants to send a message to large companies like Zendesk and Salesforce that it intends to capture the lifecycle of a business from being a small founder-led company to becoming a large management-run entity.

“The intention is to be a leader in innovation and provide world-class services for all companies that use Zoho from a very early stage,” Sridhar says.

This move puts Brand India on the map again because Zoho’s R&D runs out of Chennai. It is truly an Indian Software-as-a-Service (SaaS) success story.

Software-as-a-Service’s success in India has been well documented. The last seven years have seen the rise of Freshdesk and the iconic growth of Zoho. Has India arrived on the global stage apart from these two companies? The answer is a resounding yes. Analysts will point out to companies like Wingify and Helpshift, well-known in their own right.

SaaS, as of now, is going after verticals rather than horizontals and there are several new companies that are changing the game.

It is all up in the cloud

About two years ago, two IIT-IIM alumni and an XLRI alumnus got together after a four-year stint in the corporate world to make a dent in the human resource software product universe.

While Jayant Paleti, Rohit Chennamaneni and Chaitanya Peddi were working in consulting companies like McKinsey and EY, they realised that the businesses they were advising did not have proper human resource (HR) functions neither did they view it as a strategic function. But they had no idea that they would soon become a sought-after SaaS company.

Darwinbox is now considered India’s fastest growing enterprise Human Resource Management System (HRMS) platform and has recently concluded $4 million Series-A funding. Lightspeed India Partners led the round along with participation from Darwinbox’s existing investors, Endiya Partners, Mohandas Pai’s 3one4 Capital and Startupxseed Ventures. The company had raised its pre-Series-A round less than a year ago.

Jayant, Co-founder of Darwinbox, says the world’s largest enterprises are “increasingly thinking of HR platforms not just as systems of record but as systems of intelligence to propel their human resource agenda”.

The company has more than 50 clients covering more than 1.20 lakh employees. It works on a per-employee basis and is scaling up fast.

The SaaS brigade does not stop with HR, it is even impacting farming.

Aibono, an agri-tech company, has helped farmers with 350 harvests in five villages. Its technology is nothing but a device that collects data, about soil and the weather, which is then taken by a farm associate or the agronomist and sent over the internet—from the farm—to Bengaluru for data crunching. The farm is monitored daily and inputs provided for the crop based on suggestions by the platform.

The farmer signs up with Aibono to receive consulting and data; the investment and the market risk is borne by the farmer.

Vivek Rajkumar, the founder of the company, does not share a lot of data because he says his technology is proprietary and the company is on the verge of scaling up. The company has kicked in revenues as it takes a percentage for the yield only. It’s a service that the farmer pays for.

“We are a growing company and have figured out a model that makes farming a viable business,” he says. Sources say that he has raised $500,000 from several investors.

There are other entrepreneurs doing seemingly crazy things as well.

Meet Hemanth SM, Co-founder of Bezirk. He and his teammates split their time between the US and India trying to win over retailers.

Their software, which sits in stores, is able to track the shopping behaviour of consumers at every aisle, and will dynamically place ads on the smartphone based on their interest.

On one level, brands get to push store-level brand promotion dynamically with the retailer.

Hemanth says: “The software understands each individual uniquely and is unobtrusive. The millennial generation has no problem in sharing data and using data that is useful.”

Bezirk is now going all out in the US, with a mandate to cover 2,000 stores for a retailer. In India, it is piloting a couple of retail organisations but did not disclose names.

Abinash Tripathy, CEO of Helpshift, says: The difference between the old-world packaged software (on-premises) versus SaaS is like the difference between buying a house versus renting one.” His startup helps companies address tickets raised in their app real time. He adds that the goal of a SaaS business is all about charging for Opex (as opposed to Capex) for the long term.

The market and new Saas aspirants

According to a report by Accel Partners and Google, SaaS will contribute to more than 75 percent of public cloud revenues, driving the global SaaS industry to $132 billion revenue by 2020. SaaS products will see adoption by SMBs, which are expected to reach $76 billion.

Satyam Darmora’s i2e1 (information to everyone) makes Wi-Fi available to everyone and allows retailers to drive footfalls in their stores. Hardware investments are made by the businesses, which i2e1 preps to communicate with shoppers.

The company frees up bandwidth that is not used by the retailer to the consumer and then it identifies the consumer, after he or she logs in, to show relevant marketing collateral.

Shifting away from the retail business and focusing on the consumer goods industry is Karomi, a Chennai-based tech business, which allows FMCG companies to track their labelling art. The company has crossed Rs 2 crore in revenues and is looking at the US market to expand operations.

Perhaps the most interesting SaaS startup is Lavelle Networks, which uses the cloud to connect all offices regardless of the internet package they are on. Say Office A is using Reliance Jio and Office B is using Airtel. Sometimes the communication between the two sites may be blurry and loose. So Lavelle creates points of presence in Office A and Office B, where the software brings both sites to a data centre running on zero-latency networks.

These businesses have some risks, but customer acquisition is on their mind.

“There is a price war going on for customer acquisition. So you are really not making money on your service, and the marketing costs are high,” says Yanna Dharmasthira, Research Director at Gartner. She adds that in that context smaller companies are going to suffer because capital is being burned. “But SaaS is here to stay and enterprises see the benefits of the cloud,” she adds.

There are several Indian SaaS companies that will become the future of global business; these startups are just a few names to watch out for.

Keen to know more? TechSparks will shine the spotlight on several more SaaS companies that may well shape the future of business. Click here to get your tickets.

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