India poised to become next global SaaS capital, says EY-CII study

The Indian software-as-a-services (SaaS) market is expected to grow multi-fold by 2025, accounting for almost 7 to 10 per cent of the global market from 2 to 4 per cent currently, said a report. 

According to a study by EY and CII titled “India: The next global SaaS capital”, India is poised to become the next SaaS capital over the next few years, mainly driven by small and medium businesses with a focus on large enterprises.

The report also stated that according to industry estimates, the market is expected to reach $20-25 billion by 2025 from $4-7 billion in 2020.

“Macro-economic environment notwithstanding, the funding activity in the first two quarters of this year surpassed the funding activity in 2021 – which was a breakout year with over $4.3 bn in funding for SaaS start-ups”, said Nitin Bhatt, Technology Sector Leader at EY.

Almost 50% of SaaS providers interviewed in the study stated that driving higher awareness for SaaS products continues to be a prerequisite for customer acquisition, EY said in a statement.

“As entrepreneurs double down on scaling their ventures, they would do well to sharpen the focus on account centricity, customer success and partner with educational institutions and the government to build a SaaS talent pipeline and continue investing in product functionality and innovation”, added Bhatt.

Compared to only 1 SaaS unicorn in 2018, India now has a total of 18, taking the third spot among the largest SaaS ecosystems in the world. The study also highlights that India more than doubled the number of its SaaS companies in 2021 in contrast to 2019. Further, funding has increased from $2.6 billion to $6 billion in the span of these two years, stated EY.