Riding high on rapid cloud adoption, India's SaaS sector is all set to score big in 2022

Technology and digital transformation has been the key buzz word since a couple of years now, with large to small scale businesses shifting their operational activities to cloud and online for better productivity and ease of business activity. Owing to the pandemic and the lockdown that took into effect, working remotely became a necessity and organizations across sectors and sizes adopted to the new norms of remote working and digitization in their processes and offerings.

With growing uncertainty of the times and the likely realities of the "new normal," more and more organizations are now charting the course for transforming and moving towards cloud computing and digitization. Even looking at the global counterparts, Microsoft CEO Satya Nadella said that the company had seen two years of digital transformation in two months as even their customers had started adopting cloud solutions.

The global pandemic has somewhere pushed and accelerated the rate of adoption of cloud computing. It has acted like a catalyst and enabled flexibility with respect to cloud computation and acceptance. Gartner, in its research report stated that the worldwide end-user spending, post the pandemic, on public cloud services is forecast to grow 18.4% in 2021 to total $304.9 billion.


Some of the key reasons that businesses have adopted to this accelerated digitization is remote working, online education, focus on environmental sustainability, evolution of business operation with focus of Artificial Intelligence (AI), Virtual reality (VR), chatbots, digital payments, etc. increasing drastically.

Indian SaaS space has been growing rapidly with projection expected to grow at ~30% CAGR over 2020–25 and double their share in the global market to 8%–9% by 2025. India now has 13 SaaS unicorns as compared to one in 2018, with India being the third largest SaaS ecosystem globally, after USA and China --- Pradeep Gupta, co-founder and VC, Anand Rathi Group

In addition to digital services and cloud computing, it has been projected that the growth of India’s SaaS industry holds immense potential. A report by McKinsey and SaasBoomi have predicted that this industry will be worth $1 trillion by 2030.

SaaS companies like Freshworks and Salesforce are just two of the many in this space. Freshworks became the first Indian SaaS company to list on Nasdaq on 22nd September’21 and raised over $1 billion, with a market valuation to $10 billion. Freshwater IPO acted as a great deal in opening up doors for many other start-ups in the same space.

The Indian SaaS space has been growing rapidly, with projection expected to grow at ~30% CAGR over 2020–25 and double their share in the global market to 8%–9% by 2025. India now has 13 SaaS unicorns as compared to one in 2018, with India being the third largest SaaS ecosystem globally, after USA and China.

As mentioned earlier, Gartner estimates that SaaS will continue to maintain this dominance well into 2022. Recent research finds that:

• The SaaS market is currently growing by 18% each year
• By the end of 2021, 99% of organizations will be using one or more SaaS solutions
• Nearly 78% of small businesses have already invested in SaaS options
• SaaS adoption in the healthcare industry grows at a rate of 20% per year
• 70% of CIOs claim that agility and scalability are two of the top motivators for using SaaS applications.

We can oversee a few challenges also on the way such as finding the right skilled resources in the technological sector, the IT department would be needed to be more agile, proactive instead of depending on reactive models. There is also a challenge of compliance and data security to a certain extent which the companies would have to tackle during migration to cloud.

However, I feel that overall, the rise of software as a service solution isn’t going anywhere. Businesses from all sector and services are currently utilizing SaaS in some shape or form and as these options are only rising and would witness an exponential increase.

(Pradeep Gupta is Co-Founder & Vice Chairman, Anand Rathi Group)