SaaSBoomi - SaaS Report

Shaping India’s
SaaS
Landscape
Built in India,
Built for the World
July 2021
Shaping India’s SaaS Landscape

i
ii Shaping India’s SaaS Landscape
Shaping India’s
SaaS
Landscape
Built in India,
Built for the World
July 2021

Preface
In an increasingly online-first economy, right. With its pay-it-forward philosophy,

SaaS has emerged as a transformational SaaSBOOMi has brought together successful
industry. The global pandemic crisis has SaaS founders who have selflessly shared
created an unprecedented push towards hard-earned lessons with those in the first
SaaS, with companies across the spectrum, steps of their entrepreneurial journeys. The
from small firms to multinationals, moving results are for all to see as many India-based
significant shares of operations to the internet or Indian-centric SaaS startups launch global
infrastructure. SaaS companies, many of products with confidence and find markets
them run by Indian entrepreneurs, are helping around the world.
them make this shift.
Indian SaaS is becoming more mature. No
After years of hard work, Indian SaaS longer just a sunrise sector, it is now an
ecosystem finds itself at the right place at the industry in its own right. On the other hand,
right time. The Indian SaaS ecosystem truly with the accelerated pace of digitization,
started coming into its own in the past six Indian SaaS entrepreneurs have new
years. SaaSBOOMi, a community of founders opportunities to empower businesses
of Indian SaaS companies, has accelerated worldwide in areas as diverse as logistics,
their work on the foundations of the SaaS sales and even software development.
ecosystem. Through playbooks, roundtables, Questions remain, however, including the
meetups, mentoring and other support, the size of the opportunities, where the industry
unique, entirely founder-driven SaaSBOOMi stands now, and what industry leaders
has helped entrepreneurs starting or pivoting need to do to reach their goals. This is why
SaaS startups, get the fundamentals SaaSBOOMi has partnered with McKinsey, a
4 Shaping India’s SaaS Landscape

distinguished global organisation, to created powerful go-to-market strategies, an engine
a comprehensive report on SaaS, its growth that continuously identifies and scales new
potential, the Indian ecosystem’s role in it, and businesses, more product differentiation and
what entrepreneurs and others need to do to velocity and, critically, a better and scaled-up
help Indian SaaS capture a greater share of talent pipeline.
the global market.
The report clearly lays out the steps the
The report, “Shaping India’s SaaS Landscape,” industry could take to close these gaps and
shows unequivocally that Indian SaaS has get to the promised land. These steps will be
the potential to become a $1-trillion value of great value to SaaS founders, investors and
sector by 2030 with opportunity across the policymakers.
value chain from vertical SaaS to horizontal
I am confident that the Indian SaaS
applications and system infrastructure
community will build on its already strong
software and developer tools. The report
foundation and make SaaS a preeminent
also highlights gaps that the industry must
industry that is a large-scale employer of
close. To reach the $1-trillion milestone, the
talent, contributes significantly to India’s GDP
Indian pure-play SaaS ecosystem needs
and creates unmatched global products and
to be six times larger than it is now. The
platforms.
report highlights five key areas where SaaS
companies need to improve to scale the Manav Garg
industry. They need a razor-sharp focus
CEO & Founder, Eka
on underpenetrated target domains, more

5
Acknowledgement
This report was developed by SaaSBOOMi, which led a comprehensive

four-month effort to build a perspective on the future of the SaaS
landscape in India. Independent third-party research and analysis was
conducted by McKinsey & Company as Knowledge Partners.
We are thankful for the support, guidance and dedication of the

SaaSBOOMi Steering Committee and SaaSBOOMi member companies.
In particular, we would like to acknowledge the contributions of Girish
Mathrubootham, Krish Subramanian, Mohit Bhatnagar, Sangeeta Gupta
and Shekhar Kirani.
A special acknowledgement is due to Avinash Raghava and the entire

SaaSBOOMi team for their efforts and contributions.
Manav Garg
CEO & Founder, Eka

Special Thanks
We had one-on-one conversations with the following webinar participants

and founders.
Aakash Tulsani Karthik Reddy Rohit Chennamaneni
Abhinav Asthana Karthik Vasudevan Sameer Verma
Alok Goyal Mayank Porwal Sanjay Nath
Anand Jain Monish Darda Shweta Bhatia
Aneesh Reddy Pallav Nadhani Sparsh Gupta
Arpit Maheshwari Praval Singh Sudheer Koneru
Ashwini Asokan Prayank Swaroop Suresh Sambandam
Bhanu Chopra Rajaraman Santhanam Varun Shoor
Dev Khare Rishit Desai Yamini Bhat
Dhruvil Sanghvi
Also special thanks to the more than 40 Indian SaaS companies who
responded to our benchmarking survey.

7
Contents
4
Preface
6
Acknowledgement
7
Special Thanks
11
Executive Summary
13
Global SaaS – a trillion-
33
The Indian SaaS ecosystem
dollar global market has a trillion-dollar opportunity
41
The environment is favorable
47
Key implications for the
71
The next decade: India’s
for Indian SaaS companies Indian SaaS ecosystem SaaS industry comes of age

9
Executive Summary
After many years of hard work, India’s SaaS industry They will need best-in-class product engine with
is coming of age at a singular moment: the world now strong and empowered product management to
needs its offerings more than ever, and that need will ensure high product-market fit, high developer velocity
only grow. Organizations of all sizes were scrambling to enabled by data-driven identification and elimination of
digitize even before the Covid-19 pandemic disrupted productivity inhibitors, and ensuring developer capacity
operations, and they now understand that digital is always weighted towards growth products/features.
transformation is an imperative in a changing world.
Growing at high rates over time requires continually
Fast-growing tech-native, tech-first enterprises rely on
building and scaling new business lines at a rapid clip.
software as a service, and the leaders in every major
Companies would need to ensure they build a business
industry now see as superior to on-premise products.
building muscle beyond product development including
Indeed, global SaaS market is expected to nearly
parallel scaling of go-to-market, organization and
double from $220B in 2020 to $540B by 2025 and
talent for new business.
could reach nearly $1-trillion by 2030.
One of the biggest challenges would be scaling talent.
Indian SaaS companies now generate $2-3 billion in
We believe Indian SaaS companies will need to create
revenues each year and have earned about 1% of the
internship, mentorship and academic programs, build
global market1. If they reach their full potential, we
in-house product management capabilities, adopt
believe they can generate annual revenues of
innovative recruiting strategies, and offer employees
$50-$70 billion by 2030 and win 4-6% of the global
more distinctive value propositions, including open and
market – a value-creation opportunity of $500 billion
feedback-oriented cultures.
to $1 trillion.
Joining forces may be most important step in raising
The industry in India has extraordinary competitive
India’s global competitiveness in SaaS: startups,
advantages, including privileged vertical domain
investors, government, corporations and industry
expertise and an unmatched cost-effective ability
associations would need to rally as one. More large
to deliver a customer centric proposition. And in an
companies could support startups, co-develop
increasingly virtual business world, physical proximity is
products to suit their needs, and create innovation
no longer a requirement for sales or customer service.
pipelines for domain-specific solutions. In addition to
However, historically the Indian SaaS ecosystem has capital, investors could provide mentorship and access
systemically underinvested in growth compared to to global networks. The government could streamline
global peers. This is changing and growth rate of Indian regulations, offer tax incentives and partner with
SaaS ecosystem could double with a rethink on the universities to expand relevant graduate and post-
trade-off between profitability and growth. graduate programs. And industry associations such as
SaaSBOOMi can provide mentoring and certifications
To achieve their aspirations, Indian SaaS ecosystem
and convene industry leaders and investors.
may need to invest to build world-class revenue
engines with ability to drive efficient growth. This Working together, these stakeholders can achieve their
would require maximizing net retention (e.g., through goals and those of the Indian SaaS industry as a whole,
a focus on customer health & success enabled by benefitting the nation and its companies, communities
advanced analytics), driving Productivity excellence and families for decades to come. The singular
in sales & marketing with digital emphasis and moment has arrived.
innovating on growth models (e.g., product-led growth,
consumption model).
1 NASSCOM-SaaSBoomi : Riding the Storm report July 2020, IDC

11
01
Global SaaS – a trillion-
dollar global market
Of the $3-trillion global enterprise IT and communications spending market, software,

including software as a service (SaaS) constituted $600 billion in 2020, growing at 7-8% per
year –almost twice as fast as the overall market2 . While software comprises only 20% of
the global market in terms of spend, it drives 47% of the total value-creation across spend
segments, thus representing the most attractive segment in terms of enterprise value.
(Exhibit 1)
Exhibit 1
Software accounts for about 20% of total enterprise tech spend but drives roughly 50% of
market cap creation across the TMT industry
Enterprise tech spend and

market capitalization by Software1 20
segment (2020) %
47
IT Services2 52
41
Telecom Services3 14
Hardware4 5
14
7
Enterprise Market
tech spend capitalization
1. Includes business applications, infrastructure and vertical specific software

2. Includes BPO, External IT , Internal IT and cloud infrastructure services
3. Includes fixed and mobile network services
4. Includes Data center systems (network equipment, servers, storage, unified communications) and Devices (mobile
devices, PCs, printers)
Source: Gartner - Enterprise IT Spending by Vertical Industry Market Worldwide 2019, Capital IQ, Press Search, team analysis
2 Gartner Enterprise IT spending report by Vertical Market : Worldwide 2019

13
The impact of Covid-19 and resiliency of software and SaaS
The software and SaaS industry has been the most resilient in the recent downturns
resilient to economic shocks. Software shared three key characteristics. First, they
companies grew faster than the S&P 500 maintained balance sheet stability without
average through last two downturns in the resorting to higher leverage. Second, they
early 2000s and 2008-2009, for example continued to invest in sales and marketing
(Exhibit 2). Some software companies are and R&D through the downturn. Third, they
more resilient than others, of course, and more actively pursued acquisitions.
Exhibit 2
The software industry is quite resilient to downturns (Software total operating metrics growth,
indexed at 0 in 1997)
The software industry overall has been consistently resilient
S&P 500 Index S&P 500 Revenue S&P 500 EBITDA

Revenue Gross Profit EBITDA
Economic downturn
6
2% Growth in SW
4
+109% gap b/w SW market
28% Growth in SW
+154% growth and S&P
0
1996 98 2000 02 04 06 08 10 12 14 16 18 2020
7% Growth in S&P -13% Growth in S&P
1. Scope for resilience: Companies with revenues over $100M & existing TRS% in 2000 (for recession 1 analysis) and in 2007
(for recession 2 analysis); Resilient definition; Top 20% companies in TMT in terms of annualized TRS for recession 1 (00-04) &
recession 2 (07-11); Examples include Salesforce, Teradata for 2007 recession
Source: CP Analytics; team analysis, Capital IQ

Even at the peak of the Covid-19 pandemic, software including SaaS has been the highest-
performing category in the Technology, Media and Telecom (TMT) industry; the market
capitalizations of software companies have grown twice as fast as the median increase in the
TMT industry. (Exhibit 3)
Exhibit 3
Even during the pandemic, the software industry has been more resilient than other
high-tech sectors
During the pandemic, Mcap1 for s oftware has been the highest across in high-tech sectors
Median market cap change from Jan 01, 2020 to Jan 01, 20211 Width of bars is Jan. 2020 market cap in $
2X
the median increase
in high tech
50% Semi-
conductors
40% Technology IT
distributors services
30%
Infrastructure
20%
10%
0%
Telecom Media Device Ecommerce Software
Sources: S&P 500, CPAnalytics, Capital IQ
Within the SaaS industry, the impact of the adoption of SaaS – for example, the market
pandemic has varied across companies and capitalization of Veeva increased by 125%
domains. The growth in SaaS spending has while the travel and hospitality verticals grew
been driven mainly by large enterprises, much slowly
mostly on the back of on-premise-to-SaaS
Software domains such as content and
migration, which grew by 22% in 20203.
collaboration and cybersecurity saw
Spending by SMBs (Small and Medium-
unprecedented growth with Zoom seeing its
sized Businesses) grew slightly more slowly
market capitalization increase 5x in 2020 and
as some companies came under financial
Crowdstrike growing 5x and Okta growing 2x
pressure. Covid-19-resilient verticals such as
in same period4.
healthcare and life sciences saw high
3 IDC Public Cloud services Spending Guide – Forecast 2021

4 Bloomberg, S&P Capital IQ, CPAnalytics

15
Global SaaS – a trillion-dollar market
Three powerful trends are fueling growth increase in enterprise tech intensity over the
in global SaaS: the digital transformations next 10 years 5. A new cohort of enterprises –
of organizations, disruptions in business the tech natives and digital reinventors – are
processes accelerated by the Covid-19 likely to make the largest investments in this
pandemic, and the move from on-premise technology because they are more open to
to SaaS. adopting SaaS products rather than building
custom solutions. (Exhibit 4)
As per NASSCOM analysis, digital
transformations is expected to drive a 60%
Exhibit 4
Enterprise tech intensity likely to amplify to about 5% in the next decade
Global enterprise and consumer spending on Enterprise tech intens ity1 (Estimated average
technology (estimated share of GDP) enterprise tech spend as a share of revenue)
5.0%
7.5% 3.0%
200 bps
Enterprise tech
5.5% intensity
4.5%
2020 2030E
Tech natives 6% 8%
Digital
4% 6%
reinventors
2010 2020 2030E Incumbents 3% 3%
1. Analysis based on G2000 companies as ranked by Forbes, N=2000
Source: IDC, World Bank, Globaldata 2019 Tech Spend, team analysis, Annual reports
he pandemic has accelerated digital transformations as companies, universities and

T
governments scramble to make their products and services available online and conduct
business remotely. (Exhibit 5)
5 NASSCOM Future of Technology Services report 2021

Exhibit 5
Post-Covid, SaaS-enabled disruptions would cut across industries creating tremendous

growth opportunities
Non-exhaustive
Public Retail,
Banking & sector, a p p are l Healthcare Automotive &
Operational disruptions insurance education & CPG & PMP manufacturing
Remote and automated

customer care
Focus on supply chain resilience

(vs JIT / lean)
Shift to digital marketing/ sales
Automation / AI become central

to operations
Shift to contactless UIs
Reliance on next-gen
communication networks (e.g., IoT)
Sectoral Banking & insurance Public sector, education

disruptions
 E-banking vs physical footprint  E-learning across ages and types of
 Touchless payments (e.g., tap, p2p) education
 Fraud risk with more remote services  Rise of ‘informal’ education
(e.g., self-directed courses)
 Tech-enabled monitoring for
insurance and collections  New devices/ software to optimize
remote learning
Retail, apparel & CPG Healthcare & PMP

 E-commerce – step change in adoption  Tele-medicine
 Cashier less / tech-driven retail  Tech-enabled social distancing/
 Shift to subscriptions for household monitoring
consumables  At-home testing enabled on
personal devices
Automotive & manufacturing

 Supply chain resiliency
 Automation on factory floor
 Multi-purpose assembly lines
 Virtual product testing (e.g. automotive)
Source: IDC, World Bank, Globaldata 2019 Tech Spend, team analysis, Annual reports

17
Legacy software players are also transitioning to SaaS, driving growth in the industry. Before
the pandemic, the five largest legacy software vendors were driving more growth than SaaS-
native vendors. (Exhibit 6) That will change dramatically: SaaS is expected to generate about
80% of software revenues by 2030, up from about 35% today. (Exhibit 7)
Exhibit 6
Most recent SaaS growth has been driven by legacy SW conversion rather than
SaaS-native entrants
Top 10 SaaS 2019 SaaS revenue ’10-’14 SaaS revenue ’14-’19 SaaS revenue
vendors $B CAGR CAGR
Microsoft 22.0 34% 57%
Oracle 9.1 33% 47%

Five largest
legacy
software
SAP 6.7 43% 34% 25% 37%
vendors overall overall
IBM 4.0 54% 31%
Intuit 3.3 23% 11%
Salesforce 13.3 53% 26%
Google 8.9 36% 24%

Five largest
SaaS-native AWS 9.0 35%
49% 79%
33%
vendors overall overall
Workday 2.8 75% 40%
ServiceNow 3.4 75% 43%
Others 107.8 36% 26%
 The top 10 enterprise SaaS vendors are split 50/50 between legacy SW and SaaS native players
 The SaaS native players’ growth has slowed while legacy SW has kept pace
 While some legacy SW players have grown their enterprise SaaS share through acquisition
others have successfully transitioned license SW to SaaS
Source: IDC Report Worldwide Software as a Service and Cloud Software Forecast 2019 -23; IDC Report Worldwide Software as a
Service 2011-15 Forecast and 2010 Vendor Shares

Exhibit 7
Most software expected to be SaaS by 2030
Global software market spend split by Saas On-premise

on-premise and SaaS (%)
~65 : ~35 40-50 : 50-60 20-30 : 70-80
2020 2025 2030
Global software market spend ($ billions) Saas On-premise

SaaS penetration – 2020
SaaS
penetration
Most penetration to potentially
approach
Collaborative apps CRM ERP + SCM
70-80%
by 2030, up from
19 2 50 18 44 49
35%
in 2020
Total 90% 73% 47%
Most opportunity
Data management, SW quality and Physical and Virtual

Analytics and AI App dev SW Computing Software
69 29 11 4 40 3
Total 30% 27% 6%
Source: IDC, team analysis, expert interviews

19
The global SaaS market could be worth about $1.3 trillion in revenue by 2030 driven by more
than 20% annual growth across a fragmented landscape. (Exhibit 8)
Exhibit 8
The global SaaS market could grow at 18-20% annually to cross $500 billion in
revenue by 2025
Global SaaS spend ($ billions)
CAGR %
~ $540Bn (2020 – 2025)
2020 220 ~160 Horizontal applications 17%
~250 System Infra + dev tools 24%

2025 540
~130 Vertical specific software ~18%

2030 1,300
2025E
Size CAGR
Top-growth segments (2025 est.) (est. ‘20-25)
Analytics & AI 24 34%
Collaborative 36 20%
SCM 4 19%
The SaaS
market is highly
Data management 60 30%
fragmented:
more than 60 sub-
Integration & orchestration 17 28% segments each had
a TAM1 of over
Application platforms 17 27% $1 billion in 2020
BFSI 35 20%
Retail 12 20%
Public sector 12 19%
Source: IDC, World Bank, Global data 2019 Tech Spend, team analysis, Annual reports

Ways of working are shifting: roughly 48% System infrastructure and developer tools
employees are likely to work remotely is expected to be the fastest-growing
at least part of the time after Covid-19 segments. In these segments, data
according to McKinsey’s 2020 Global management software, focused mainly on
Business Executive survey6, driving growth cloud-based data services, security, mostly
in content, collaboration and remote work for authentication and cloud, and integrations
enablement software. and orchestration software, including API
management software, likely to see the
In the vertical SaaS category, next-gen
fastest growth. (Exhibit 9)
fintech and retail POS (Point of Sales)
companies are likely to outperform. Shares While North America may continue to be the
of Square, for example, have risen more largest market, Asia, Europe and MEA are
than 4x in 20207. Cloud adoption is poised to showing equally strong growth rates across
accelerate in healthcare and wellness. geographies . (Exhibit 10)
Exhibit 9
System infra and dev tools likely to be major growth areas driven by data management and
integration & orchestration middleware
System infra and developer tools market, $ billions xx CAGR 2020 2025E
30% 16% 22% 28% 27%
60 16
25 12 20 7 17 5 17 5
Data Security System and Service Integration and Application

Management Software Management Orchestration Platforms
Software Software Middleware
12% 25% 26% 15% 20%
6 3 6 2 6 2 1 3 12
Storage Physical and Software Endpoint Application
Software Virtual Computing Quality and Life Management Development
Software Cycle Tools Software Software
1. Backend includes software such as Integration, data management and system maintenance software
2. Frontend includes software such as ERP, CRM and SCM
Sources: IDC public cloud spending guide 2019-2024, team analysis
6 https://www.mckinsey.com/featured-insights/future-of-work/what-800-executives-envision-for-the-postpandemic-
workforce

21
Exhibit 10
North America North America Europe Asia & MEA RoW

continues to be the
largest market, 207
but Asia and MEA
are growing
fastest 168
130
32
Global SaaS CAGR 19.2% 18.5% 19.4% 19.0%

2020-2025
Sources: team analysis, IDC Public Cloud Spend a Report
Looking ahead: Key trends in the global SaaS industry

Ten key trends are expected to play out over the next decade in the global SaaS industry:
1
Growth is a key driver in valued at about 25x enterprise value (median
value-creation EV/revenue multiples) compared to under
10x for companies growing by less than
The growth prospects of SaaS companies
25%. Also, the growth of high-performing
have raised their value to a median of about
SaaS companies has been accelerating: the
14X revenues8, creating trillions of dollars in
average growth of the 100 largest private
value. Analysis shows that growth matters
firms by revenues increased from about 60%
the most in this industry: SaaS companies
in 2016 to roughly 80% in 2020. (Exhibit 11)
that grow at more than 50% annually are
8 Analysis of top 80 public SaaS companies using Bloomberg financials

Exhibit 11
Growth matters the most in this industry

Investors reward growth in SaaS companies Average growth of the largest private
SaaS companies has increased in the
Median EV/revenue multiples of 80 global public last 3-4 years
pure-play SaaS companies Average growth of the top 100 private
SaaS companies in the last 12 months
28x
Growth over 50% Under 25%
25-50% Overall median
24x
90%
20x 80%
16x
60%
12x
8x
4x
0x 2016 2019 2020

2016 2017 2018 2019 2020
Sources: Bessemer Venture Partners, Bloomberg, Forbes Cloud 100, Nasdaq EMCLOUD index, team analysis
2
Building scale quickly matters
Category leaders in key SaaS segments
are scaling even more rapidly than before.
Cornerstone OnDemand, for example, took
12 years to grow from $1 million to $100 million
in ARR, while emerging giants like Slack, Twilio
and HashiCorp achieved the same in under
4 years, taking industry-leading positions9.
Category leaders also set the pace of
innovation, bringing new disruptions to their
market segments. In video conferencing,
for example, Zoom revenue grew by over
300%10 in second quarter of fiscal year 2021
with category-first features such as low-
bandwidth performance, virtual backgrounds
and filters.
9 Bessemer Venture Partners – State of Cloud report 2020


23
3
Continuous product innovation helps build the next S-curve
Companies continuously develop new product extensions or new offerings that can be sold to
the existing customer base to expand their shares of the global addressable market. They use
a customer-led approach to product development, identifying unmet needs and iterating in
agile ways to release SaaS offerings every 12-18 months.
4
Investing in sales and marketing pays penetration of customers and building an
off, as long its productive efficient growth engine is key to long term
success. However, the investments need to
An analysis of top 80 public pure-play global
generate returns in reasonable time periods.
SaaS companies reveals that while sales
Payback period is a measure of how long it
and marketing investment intensity (as % of
takes a company to recuperate spending $1 in
revenue) decline over the years, companies
sales & marketing in gross profit. Top quartile
investing a higher share of revenues in GTM
companies (by EV/NTM revenue multiple)
have consistently outpaced others in growth
have LTM median payback periods of 16
and valuations. (exhibit 12). This is driven by
months and bottom quartile companies have
the fact that SaaS industry is early in its
it at 47 months11.
Exhibit 12
Fast-growing SaaS companies consistently spend 1.5-2X more on sales and marketing than
slow-growing companies
Sales & marketing spend as a share of revenue (median)1
High growth companies (>50% Revenue CAGR2)

70% Medium growth companies (25-50% Revenue CAGR2)
Low growth companies (<25% Revenue CAGR2)
EV/Revenue
60%
multiple
50% 26x
40%
15x
30%
10x
20%
2016 2017 2018 2019 2020
1. Analysis includes ~80 global pure-play SaaS companies

2. CAGR for 3-5 years depending on data availability
Sources: Bloomberg, team analysis

11 SaaSRadar bechmarking

5
Value-creation is also governed by operating performance measured under the
“rule of 40”
The popular metric says that a SaaS Exhibit 13

company’s growth rate when added to its SaaS companies are valued highly but variance
free cash flow rate must equal 40 percent is large and growth is one of the key drivers
or higher. The rule has become a favorite of
SaaS industry watchers, including boards and Median EV/LTM Revenue Multiples1 vs LTM Growth
management teams, because it neatly distills 25
a company’s operating performance into one
number. But McKinsey research finds that
barely one third of software companies achieve
the Rule of 4012. And fewer still manage to
14
sustain it. Analysis of more than 200 software
companies of various sizes between 2011 and
2021 found that businesses exceeded Rule of 40
8
performance only 16 percent of the time. Data
shows that investors reward companies that
are at or above the Rule of 40 with consistently
higher enterprise value (EV) to revenue
Top Overall Bottom
multiples. Moreover, the higher the number, the quartile quartile
greater the gain. Top quartile SaaS companies
1. Analysis includes ~80 global Pure Play SaaS companies
generate nearly three times the multiples of
2. Last Twelve Months
those in the bottom (Exhibit 13)
Source: Bloomberg financials
6
Democratization of SaaS would continue
With the adoption of cloud and increasing maturity of enterprises in deploying standardized use cases
in an SaaS model, about 40% of SaaS companies are built outside North America; India and Europe are
among the largest ecosystems outside United States. (Exhibit 14)
Exhibit 14
100%
SaaS is a global opportunity - 40% of
20%
the top ~600 public SaaS companies
have been founded outside US 21%
59%
Public SaaS companies 2%
by geography, number of India
companies (n=584)
USA Europe RoW (excl. Total

USA, Europe)
Sources: IDC Public Cloud Tracker – vendor data, expert Interviews, team analysis
12 https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/grow-fast-or-die-slow

25
7
Remote selling may become mainstream after the pandemic
The product and engineering teams of leading SaaS companies have learned to become
100% distributed with distributed agile and DevOps methodologies13. The shift towards remote
selling started pre-pandemic, but the trend is expected too accelerate as Covid-19 wanes, with
about 80% of sales driven via remote or digital channels. (Exhibit 15)
Exhibit 15
Digital channels such as Inside Sales are becoming more prominent post pandemic
Inside sales orgs are growing as a … touching more than 50% of revenue and
percent of the total sales force… covering national and strategic accounts
Size of Field vs. Inside Sales orgs Portion of revenue touched 1 by Inside Sales
% of responses % of responses
55
45% of Inside Sales Almost
7
orgs are as large as or none
larger than their Field
Sales counterparts
Up to a
quarter 39
28
Up to half 34
17
Up to 54%
three- 17
quarters of IS orgs touch
half or more of
all revenue
Field Sales Same size Inside Sales All revenue 3
team is larger team is larger
1. "Touching" revenue is defined as playing a significant role leading to the close of a deal
Sources: Inside sales survey, Sept 2019, TMT Samples (N=150)
Source: McKinsey Inside Sales Survey, Sept. 2019;

technology, media, & telecom sample (N= 150)
13 Interviews with SaaS founders in North America and India

8
Emergence of new GTM motions
The pandemic has accelerated the growth of digital marketing to reach end users directly,
companies relying on “product-led growth” use “freemium” channels to aid in acquisition,
(PLG), an end-user-focused model that relies and rely on self-serve channels to drive
on the product itself as the primary driver conversion. PLG-focused companies rapidly
of customer acquisition, conversion and collect “live” product feedback via telemetry,
expansion. According to an analysis, the 20 develop new features and enhancements,
largest public SaaS companies with PLG and automatically “nudge” customers to drive
strategies tripled their market capitalizations expansion and reduce churn.
in 2020. (Exhibit 16) These companies use
Exhibit 16
Covid-19 has accelerated growth in the market cap of public product-led companies
Market capitalization 1 ($ billions) FY2020 Growth rate
3x 88%
Product Led Growth
432
is an end user-
focused growth 66%
model that relies on
the product itself as
57%
the primary driver of
customer acquisition,
conversion and 152
50%
expansion
74
25 40% Median1
2017 2018 2019 2020
1. Top ~20 global pure-play SaaS companies having PLG strategy
Sources: Bloomberg, team analysis, OpenView venture partners
Similarly, the GTM motions for AI-first SaaS among others . Customers pay as they
companies such as C3AI, an industrial IoT and scale their business. Providers who use
analytics player, and DynamicYield, a retail such pricing schemes can command up
analytics player, are centered around strong to 10-percentage-point higher net dollar
outbound-led and field sales-led POCs to retention rates, according to BVP State of
prove the use cases or data partnerships to Cloud 2021.
augment their models14. This sales motion
— Cloud marketplaces of hyperscalers
requires strong technical sales talent, solution
are becoming key sales channels for
architects to integrate the SaaS platform
many SaaS companies. In 2020, Auth0, a
with customer data, and customer success
leading identification and authentication
teams with strong vertical knowledge.
player, generated 10x year-on-year
— SaaS industry has seen emergence of growth via its cloud marketplace, while
consumption based business models early adopters such as CloudStrike, a
where growth is driven by usage cloud workload security player, saw sales
instead of seats-based model driven cycles decrease by up to 50% with a keen
by companies such as Twilio, Snowflake focus on cloud marketplaces15.
14 Expert interviews
15 Bessemer Venture Partners – State of Cloud report 2020, 2021

27
9
Rise in M&A and wave of consolidation post Covid-19
M&A activity with Salesforce’s $27.7-billion M&A activity is likely to pick up, especially
acquisition of Slack, clocking a 33X revenue in domains with low concentration and or
multiple, the highest ever in the SaaS low to mid pre-Covid-19 growth projections.
industry16. (Exhibit 17)
Exhibit 17
Consolidation likely to accelerate in domains with low concentration and/or low to mid
pre-Covid growth
G r o w th v s . m a r k e t c o nc e ntr a ti on a c r o s s 8 2 s o f tw a r e d o m ains
Low- to mid- concentration SW in domains where short term financial 2018 market size, $M
and pre-Covid growth troubles may lead to high likelihood of
accelerated consolidation ≤ 500 10,000 20,000 30,000 40,000
30
Services Industry and
Public Sector Applications
25
Pre-covid projection: CAGR 2018-22, %
Payroll Accounting Other

20 Applications Procurement Engineering
Applications Applications Mechanical
CAE Applications
15
10
0
Mechanical
Financial Applications CAD Applications
-5
0 0.05 0.10 0.15 0.20 0.25 0.30
Herfindahl Index 2018,
Unconcentrated Moderate concentration High concentration
Sources: IDC, team analysis
16 Bessemer Venture Partners – State of Cloud report 2020, 2021

10
Emergence of SaaS hotspots
Given the recent disruptions, seven key SaaS domains are emerging that are likely to drive
growth over the next five years. While remote work enablement platforms like Zoom and Slack
grew in 2020 17, growth in the developer tools segment is expected over the next five years as
technology firms drive digital enablement in their end-user industries. In terms of horizontal
platforms, distributed talent management, digital commerce and supply chain platforms are
likely to cater to the work-from-home workforce. (Exhibit 18)
Exhibit 18
Recent disruptions have accelerated SaaS adoption in seven key domains

Illustrative | Not exhaustive
1 Modernization of
business workflows 2 Remote work
enablement 3 Developer tools/
analytics
infrastructure
4 Digital supply
chain
5 Distributed talent
management 6 Digital
commerce 7 Next-gen financial
services
Source: Press search, Pitchbook, IDC Worldwide Public Cloud Services Spending Guide - Forecast 2021
In the vertical SaaS market, opportunities are likely to be at a micro-domain level driven by
digitization across industries (Exhibit 19)
17 Bloomberg, S&P Capital IQ, CP Analytics

29
Exhibit 19
SaaS opportunity will be broad-based with 400+ micro-domains
Illustrative & not exhaustive

(Size $B 2025, %CAGR 2020-2025) Emerging opportunities
Automotive & Public Sector,

BFSI (35, 20%) Manufacturing (19, 18%) education (16, 18%) Retail (12, 20%)
Open banking & 3P1 Open banking & 3P1

Digital Citizen engagement
(including core banking Workforce optimization (including core banking
solution
modernization) modernization)
Comprehensive claims Next-gen connected cars Next Gen Smart City Comprehensive claims
management solution solution solution management solution
Digital lending and credit Digital lending and credit

Plant of the future E-learning platforms
risk solution risk solution
Digital payments E2E Auto R&D product Digital payments

Public healthcare
architecture enablement planning, design and architecture enablement
digitization solutions
and management acceleration and management
Digital demand and

Card issuance, renewals Remote learning Card issuance, renewals
supply planning solution
and management optimization and management
with dynamic pricing
Regulatory and risk Regulatory and risk

management management
Healthcare and Travel, Hospitality Oil & Gas,

Hi Tech, SW (9, 18%) Lifesciences (9, 17%) and leisure (9, 17%) Industrials (1, 19%)
Digital O&G field ops incl.

Remote health care Digital travel ops
Digital enabled sales site selection, dev twins,
monitoring management
optimization
BI & analytics driven 360 degree patient Digital core booking Digital production
business engagement and care platform optimization
Customer loyalty &

Digitized employee High-performance
Clinical trial acceleration relationship management
engagement computing and telecom in
solution
remote locations
Digital demand and supply

Self-serve tools to improve Regulatory reporting and
OTT media platforms planning solution with
employee experience compliance
dynamic pricing
Comprehensive
Leading-edge engineering Population health Online food delivery
O&G remote asset
productivity tools management platforms
management
Digital Quality Regulatory and risk

Management management
Source: team analysis, McKinsey Digital Opportunity Identifier, press search, expert interviews
To scale up and win in the next decade, Indian SaaS companies will therefore need to focus on
high growth and drive supporting changes.

31
02
The Indian SaaS ecosystem
has a trillion-dollar
opportunity
Entrepreneurs in India, recognizing global Indian SaaS companies have seen significant
opportunities, have founded roughly a success in horizontal applications and
thousand funded SaaS companies in the are beginning to gain traction in vertical
last few years, almost double the rate five specific software and developer tools/
years ago, creating ten unicorns. Indian SaaS system infrastructure software (Exhibit 20).
companies now generate $2-3 billion in total As a result, Indian SaaS companies have as
revenues and represent about 1% of the much upside potential in horizontal apps
global SaaS market based on SaaSBOOMi/ as they do in vertical specific software and
NASSCOM data developer tools.

33
Exhibit 20
The majority of Indian SaaS revenue comes from horizontal applications, indicating untapped
opportunity in other segments
Illustrative | Not exhaustive
Indian pure-play SaaS revenue ($2.6 billion)

Split by segments
Description Top sub-segments Select players

Horizontal Applications to CRM
a p p l ic a ti o n s support business
processes across
verticals
ERM
74% Collaboration &

productivity
Developer tools & Applications to Infrastructure (Data

system Infra manage tech management, middleware)
stack of
businesses Dev Ops tools, API
management
15%
Software quality
Vertical specific Applications to Healthcare & Wellness

software support business
processes in
specific verticals Retail & CPG
11% Banking
Source: Nasscom 2020 India SaaS opportunity, SaaSBOOMi, team analysis
Further, contrary to general perception of Indian companies being SME focused, Indian SaaS
companies generate 40% of their revenue from enterprises with 60% of revenue coming from
SMBs (exhibit 21)

Exhibit 21
Contrary to perception, mid-market and large enterprises also account for a significant share
of Indian SaaS industry's revenue
Illustrative & Exhaustive
40% 60%
Mid-market & SMB
large enterprises
$2.6
billion
Indian pure-
play SaaS
revenue
Source: Nasscom 2020 India SaaS opportunity, SaaSBOOMi, Press search
Indian SaaS companies have driven structural Six new unicorns emerged during the
shifts across some areas to navigate the pandemic (Postman, Zenoti, Innovacer,
pandemic, including using virtual GTM Highradius, Chargebee and Browserstack)
and shifting to digital marketing. Zoho, for bringing total number of Indian unicorns in
example, enabled sales teams to work B2B SaaS to ten. A few high-value investment
remotely by providing collateral, videos and deals were made even during the crisis,
demos18; Kissflow pivoted to nearly 100% including a $150-million investment in
remote sales for US customers, according to Postman and a $100-million investment in
interviews. Indian companies also innovated in Fourkites. (Exhibit 22)
their portfolios during the pandemic19.
18 https://www.zoho.com/r/covid19/
19 https://kissflow.com/news/kissflow-launches-remoteplus/

35
Exhibit 22
About $1.5 billion was invested in Indian SaaS companies in 2020, four times more than two
years ago
Indian SaaS investments , Examples of recent funding

$Bn (illustrative) Indian SaaS unicorns 1
2019 $130 million
2020
$160 million
~1.5
$150 million
2018
2020 $150 million
~0.4
$55 million
2021 $100 million
1. Postman, Zenoti, Highradius , Innovacer, Chargebee and Browserstack became unicorns during pandemic
Sources: Pitchbook, press search, team analysis
The future of the Indian SaaS ecosystem: market size and key
growth vectors
If Indian SaaS providers execute to their opportunity of $500 billion to $1 trillion.

full potential, they could generate annual (Exhibit 23)
revenues of $50-$70 billion by 2030 and
This massive value-creation opportunity
win 4-6% of the global SaaS market. Based
in such a short time could rival the value
on recent public SaaS company revenue
created by the larger Indian IT services
multiples, this represents a value-creation
industry by 2030.

Exhibit 23
Indian pure-play SaaS ecosystem could … creating $500 billion-$1 trillion in value in
generate $50-70 billion in revenues by 2030… the next 10 years
Revenues of Indian Pure Play SaaS companies, Indian pure -play SaaS industry implied
$ billions enterprise value, $ billions
20-30%
500-1,0502
50-70
40-50%
220-4201
15-21
~2.6
501
2020 2025E 2030E 2020 2025E 2030E
Global
~1 3-4 4-6
market share
1.Revenue multiple of 20X (2020) – basis median of more than 55 global SaaS companies in BVP Cloud index
2.Revenue multiple of 15-20X for 2025 and 10-15X for 2030
Sources: IDC Public Cloud Spend Report, SaaSBOOMi, BVP cloud index, NASSCOM, team analysis
The Indian SaaS industry could achieve industry could capitalize on global nature of
this growth by increasing its penetration in SaaS opportunity across US, Europe, as well
vertical specific SaaS software and developer as Asia and MEA.
tools / system infrastructure software, while
Achieving this growth would require
at the same time strengthening its market
expanding the Indian SaaS unicorns by 10X
position in traditional growth areas such as
by 2030. (Exhibit 24)
horizontal SaaS – CRM, ERP and collaborative
applications. Geographically, the Indian SaaS

37
Exhibit 24
To achieve its potential in SaaS, India may need to scale $100M+ companies by at least 10x
Revenues Distribution of Indian pure -play SaaS companies
>5 billion - ~2
1-5 billion - ~10
500 million-1billion 1 12-14
100-500 million 4 30-35
50-100 million 4 80-100
10-50 million ~30 150-300
<10 million ~1000 2500-30001
2020 2030E
1. Includes pre revenue SaaS companies
Sources: team analysis, press search, SaaSBOOMi, Nasscom, IDC Software vendor data, BVP index, Forbes 100 cloud list
The potential would be bounded only by talent in the next 10 years. As a reference, the
the availability of talent in India, including Indian IT services industry grew its talent six-
cutting-edge skills in product management, fold from 4.3 lakh in 2001 to 23 lakh in 2010,
R&D and sales and marketing. India may need according to NASSCOM.
to become the global powerhouse of talent.
Indian SaaS companies may also need to
Government, industry associations such as
reach 60-70% of the current average revenue
NASSCOM and SaaSBOOMi, SaaS companies
productivity of the global SaaS industry, or
and the entire ecosystem would need to
roughly $190,000 in revenue per employee.
come together to at least triple the available

39
03
The environment is
favorable for Indian
SaaS companies
Indian SaaS companies could build on several advantages to realize their
full potential.
The pivot to remote go-to-market models is reducing barriers for Indian

SaaS companies
One of the most significant impact of This shift fundamentally levels the playing
pandemic has been on the buying behavior of field for Indian SaaS companies in access
enterprise technology customers, particularly to customers, end-markets and decision
in SaaS. The shift to digital and remote selling makers. In the years ahead, instead of being
has seen a step change acceleration and hampered by a lack of field presence in the
expanded significantly beyond the small US, Western Europe and other key markets,
business segment to medium and large Indian SaaS companies may be able to
enterprises. Research shows that nearly 80% drive digitally enabled marketing and sales
of the go-to-market in SaaS would be digital with tailored vectors for target customer
or remote across customer segments with segments, directing field sales investments to
varying mixes of different motions across critical customer segments and touchpoints.
segments (see Exhibit 25). Field selling may Coupled with product-led growth models
be restricted to only the most important in several segments and strong analytical
moments in larger complex deals. capabilities, this shift represents a massive
tailwind for Indian SaaS ecosystem.

41
Exhibit 25
Indian SaaS ecosystem is seeing reduced barriers in go-to-market as selling motion shifts to
digital and remote models
Field Hybrid Digital Inside
Account
size From (Traditional GTM) To (Digital-first GTM) Description
100%  Primarily remote selling with field selling

50%1 30% only for most important moments
Large  Developer-focused motion through
product-led models, marketplaces, etc.
20%  Account based marketing
Medium 60%1 40% 40% 50%  Primarily inside sales supported by

account-based and digital marketing
 Digital-first and product-led buying
10% motions to rise
Small 70% 20%  Primary motion is digital – digital

30% demand gen, digital marketing and
digital sales
80%  Inside selling expected on complex

products and larger SMBs only
1. Combination of field, inside and digital

Source: Expert interviews
Inherent advantage to serve large and small enterprises post-sale
Serving customers effectively post-sales is and success, customer care and professional
one of the most critical drivers of success for services. SaaS companies usually have
SaaS companies. Net retention rates (cross- an overwhelming focus on gaining new
sell / up-sell minus churn) above 120-130% are customers and because existing SaaS
critical to driving high growth and creating customers generally don’t pay extra for post-
value . Research has shown that median sales support, they under-invest in post-sales
valuation multiples (EV/NTM Revenue) of customer engagement. So the additional
companies with net retention rates more effort in courting them seems unprofitable.
than 120% are 21x versus multiples of 9x for But neglecting existing customers ends up
companies with net retention rates lower adding cost in the long run, resulting in more
than 120%20. churn, lower cross- and up-sell, and more
Driving higher net retention requires SaaS pressure on sales teams just to stay level.
companies to invest in in customer health By looking at customer success and related
20 SaaSRadar benchmarking

efforts as an investment in growth rather implementation services and deep customer
than as a cost center, companies can protect engagement to drive cross-sell, upsell and
their installed base and gain scale and prevent churn. As stakeholders for SaaS can
efficiency. vary from developers, to business-line leaders
to CIOs and CXOs, this ability to swarm
Indian SaaS companies have an inherent cost
the customer cost-effectively is a huge
advantage which puts them in advantageous
advantage. (Exhibit 26)
position in providing white glove post-
sale customer support, professional
Exhibit 26
Indian SaaS companies have several advantages in serving large enterprises and small and
medium-sized businesses
Global SaaS market by

customer segment (2025) India’s value proposition
Deep expertise in Category creation in “White glove”

enterprise business privileged enterprise customer success/
Mid market processes markets services
& Large
enterprises 55% ~60% ~3M 120K
enterprise workflows Software developers Inside-sales talent
run from India by in India (1.5x of US) (2nd largest English
IT-BPO players speaking)
Value-for-money & Robust online/inside Deep understanding

frugal innovation mindset sales motion of SMB challenges
SMB 45% 2-3x 55%+ 63M
lower cost to serve sales via digital/ MSMEs in India
remote sales
Sources: Expert interviews, team analysis, press search, Indian SaaS companies survey (n=40+)

43
Indian firms could build better products with a deeper understanding of
customers in key segments
With privileged access to key market segments, Indian SaaS companies can understand
customer needs better and translate deeper insights into better products that win globally.
India is home to about three million And thanks to the large concentration of
developers – the largest concentration in IT services companies in India, with about
the world, 50% larger than in the US 21. Indian $190 billion in revenues in [2020], Indian SaaS
SaaS companies can design products that companies could possibly create the world’s
solve developers’ most urgent needs and best products for service businesses from
drive widespread adoption of their products, finance to high-tech, and from supply chain
eventually creating network effects and to sales and IT24. Leveraging this proximity,
achieving dominance in the category. As a Indian SaaS companies could become leaders
result, Indian SaaS companies have a strong in the vertical-specific SaaS segment that is
hand in the developer tools market, which expected to generate revenues of about $130
could be worth about $160 billion by 2025 billion annually by 2025, based on IDC data22.
based on IDC data22.
Up to 60% of global IT and operations
India’s approximately 15,000 software workflows are now managed in India25, giving
customer support and professional services local providers with deep domain expertise
employees could provide white glove great opportunities to productize these
customer services to boost the retention that processes and create new categories of
is critical to value-creation23. growth in a range of sectors.
21 NASSCOM-SaaSBoomi : Riding the Storm report 2020

22 IDC Public Cloud services Spending Guide – Forecast 2021
23 LinkedIn TalentInsights
24 NASSCOM Strategic Review 2021
25 Analysis of top 10 IT services companies revenues by geo based on annual reports

Innovating on new capabilities for global market opportunities
Indian SaaS majors are driving leadership While large enterprises contribute 40% of
and defining new categories in the global the revenues in the Indian ecosystem, Indian
SaaS ecosystem, including Postman in SaaS companies have built robust enterprise
API management, and BrowserStack and product strategies, including meeting the
LamdaTest in quality assurance and testing. needs of large enterprises for security and
Indian companies also have “global-first” at-scale deployment. HighRadius, Druva and
mindsets – Indian SaaS players generate RateGain, for example, now serve more than
more than 70% of revenues in international 50 Fortune 500 clients26.
markets21.
Global SaaS and software companies
They are using the domestic market as a are also investing in next-gen product
testbed for innovation and then leap-frogging management and technical talent in India,
into the global arena. For example, more which will seed the SaaS ecosystem. About
than 140 AI/ML SaaS players are emerging in 40% of Adobe’s global product management
the Indian ecosystem such as Gaia, an AI-IoT talent is based in India, for example, and its
powered smart feedback platform, Bizom’s products are managed out of India27.
retail intelligence platform focused mainly
on India, and Aselector’s AI-based knowledge
management platform incubated in India21.
26 Company websites
27 LinkedIn Talent Insights

45
04
Key implications for the
Indian SaaS ecosystem
5 key implications for the Indian SaaS ecosystem could be considered to capture its full
potential (Exhibit 27)
Exhibit 27
Key implications for the Indian SaaS ecosystem
A B C
Accelerate shift to Invest in world-class Build industry leading
growth mindset revenue engine product capabilities
Prioritize growth, long term Maximize Net Retention Create Product Manage -
market leadership and (customer health & success, ment excellence to ensure
securing future free cash advanced analytics) high product-market fit
flows over near term
profitability Productivity excellence in Build strong foundation in
s ales & marketing with product des ign, product
Invest at level of global peers digital emphasis engineering & product
in go-to-market and product operations
Innovate on growth models
(product-led growth, Boost developer velocity by
consumption model) unpacking software
engineering black-box
D E
C o n ti n u a l l y b u i l d & r a p idl y Concerted support from
scale new businesses the ecosystem
Focus on Next Market Industry associations,

Identification (Micro-domains, government, investors and
User Personas) corporates could help
significantly
Make busines s building a
core muscle (GTM, org & Scale talent by 3-6x, SaaS
talent in addition to product) s tart-ups could grow by 10x
and could attract 3-4x of
Scale rapidly (20% of ARR
current funding levels
from new business in 18
months)

47
Sources: Expert interviews, Team analysis
Accelerate shift to growth mindset
On average, Indian SaaS companies surveyed spent by global leaders28. The accelerating
are growing at 30-50% compared to global pace of digitization means the slower
leader at 60-80%. Indian SaaS companies companies ramp up their footprint the more
surveyed with annual revenues of under opportunity they may be forgoing to their
$5 million are growing at only about 50% competition. Investing now helps attract new
compared to 150-200% for their global customers and expand presence in existing
peers28. At the same time leading Indian SaaS ones, which secures long term free cash flows,
players are growing at or above pace of given the recurring nature of SaaS model, and
global leaders. (Exhibit 28) hence drives higher enterprise value.
Based on surveys and our experience, many Leaders in Indian SaaS ecosystem are already
Indian SaaS companies are underinvesting in investing at levels that is helping them drive
their go-to-market efforts: on average, Indian high growth and further improving their long
SaaS companies spend only about 25% of term trajectory.
revenues on GTM compared to about 60%
Exhibit 28
Indian SaaS companies need to find value-based pricing metrics suited to their
business models
Indian SaaS players Indian SaaS leaders Global SaaS leaders
Overall growth
30-50% 40-100% 60-80%
Growth from current

customers
Net dollar retention
80-105% 80-130% 125-150%
Gross margin
55-65% 65-90% 75-80%
GTM investment
Sales & Marketing as
% of Revenue
25-30% 20-35% 40-60%
Sources: SaaSRadar database – includes 50+ metrics for 200+ private and public SaaS companies; Indian SaaS companies survey
(n=40+), Expert interviews

Invest in world class revenue engine
Best-in-class SaaS companies focus across Indian SaaS companies could focus on four
all stages of deal and execute across each areas to turbocharge the revenue growth
lever, from marketing effectiveness and engine::
sales productivity to pricing, inside sales
— Next-gen demand generation:
and renewals.
High-growth SaaS companies have
As they channel these investments into built sophisticated demand-generation
different areas, Indian SaaS players may engines enabled by analytics-led deal
need to think holistically about GTM, including origination and prioritization to drive
demand generation, increasing the number 3-5 percentage-point increases in
of leads, deal conversion and increasing revenues and up to 2X improvement in
deal value through optimized pricing and customer experience. (Exhibit 29)
packaging, improving cross-sell and upsell,
and using customer success teams to
reduce churn.
Exhibit 29
High-growth companies have built sophisticated demand generation engines enabled by

analytics-led deal origination & prioritization
Illustrative
Global players have

unlocked value through Indian companies can take inspiration from global players
digital demand gen to build a next-generation demand generation engines Examples
Analytics-led • Sophisticated SEO, SEM and landing page Data driven

lead gen experience demand gen
• Analytics-led micro-segmentation of
3 to 5pp prospects based on spending and behavioral
additional patterns
revenue
unlocked Predictive • Predictive lead scoring & prioritization through Predictive lead
lead multi-factor analytics and CX tracking prioritization
prioritization • Automated mapping to most effective
channel
Targeted • Social media engagement, digital enablement

nurture & of sales rep and gamified trainings
acquisition • Experience personalization & behavioral
2x re-targeting based on online-offline / Sales rep
in-moment actions enablement
improvement in
customer
experience
Scientific • Next product to buy analytics
cross-sell • Trigger-based marketing (including product
telemetry based triggers)
Sources: McKinsey COVID-19 B2B Decision-Maker Pulse (April 2020); team analysis

49
Value-and usage-based pricing
Indian SaaS players could explore value- units have achieved 40 percentage points
based pricing to provide flexibility to end higher ARR growth and about 10 percentage
customers while improving retention. Today, points higher net retention. Depending upon
user-based pricing is the dominant metric their business model and product offerings,
for about 50% of the Indian SaaS companies many more Indian SaaS companies may
surveyed. Analysis shows that globally, SaaS need to find value-based pricing metrics.
companies that price by non-user-based (Exhibit 30)
Exhibit 30
Indian SaaS companies may need to find value-based pricing metrics suited to their
business model
Globally, SaaS companies that price by non-user-based units have Most Indian SaaS companies price
achieved ~40pp higher ARR growth & ~10pp better net retention by user
User based Public cloud mean Dominant pricing metric

Percent of Indian SaaS
Non-user based Non-user based mean companies3
ARR growth by pricing Net retention rate User 50

metric Percent Percent
Usage 26
115 75 137 126 Fixed fee 8
Asset2 8
Others1 8
40pp 10pp
1. Transaction based, combination of usage and users
2. Number of instances, databases
3. Based on survey
Source: SaaS Radar; Indian SaaS companies survey, n=40+
Transparency in measuring marketing effectiveness and conversion rate:
Indian SaaS players could adapt marketing motions and lead conversion metrics from best-in-
class global players to optimize marketing ROI. (Exhibit 31).

Exhibit 31
Best-in-class global players measure effectiveness and conversion rates across the
marketing funnel Critical step for sales reps
Lea d stag e (marketing managed) Opportu nity stage (sales and channel managed)
Sales
motions Opportunity
Awareness Interest Lead creation Lead qualification Quote Purchase
management
Pipeline
stages Rea ch a b le
Visits Inquiries MQL1 SAL2 S Q L3 SQO Deal Won
audience
New Awareness Interested Inquiry Lead Inside sales Field sales Field sales pursues to Deal is
logos generation party captu red by scoring a ccep t meets p rosp ect close deal by quoting closed a n d
campaigns intera cts first inbound or tool to MQL and for opportunity and negotiations marked as
launched through a outbound determine sets up quantification won in CRM
platform tactic buying meeting and gauge buyer S u p port through
propensity customer success SIs involved
team
Existing In sta ll b a se-d irected Inquiry Lea d scored a n d rou ted
logos marketing captu red by to S DR or Accou n t tea m
marketing or for qualification
sales / partner
Key
Visits: Inquiries: MQL: SQL:
metrics Inquiries MQL SQL Deal Won
Best -in-
class 6-8% 20-24% 14-25% 20-27%
1. Marketing qualified lead; 2. Sales accepted lead; 3. Sales qualified lead
Sources: team analysis; Expert interviews

51
Churn management through effective customer success
In GTM, Indian SaaS companies may need customer is generally much less expensive
to invest in customer success to reduce that finding a new one. Best-in-class SaaS
churn, which experts say ranges from 10 to companies generally keep churn under
25%. Experience shows that leading SaaS 10%29;, churn over 15% would be a red flag. An
companies globally spend about 90% more analytics-based customer success engine
on customer success for larger accounts could play a key role in minimizing churn.
to reduce gross revenue churn by 4-5 Product telemetry, such as login frequency
percentage points (Exhibit 32) and the use of specific features, could yield
insights into which products and customers
Reducing churn is a powerful tool for
are at risk and trigger interventions such as
maintaining profitability because keeping a
the attention of specialized “win-back” teams.
Exhibit 32
Investments in customer success could help Indian SaaS players lower gross revenue churn
Top Quartile Median
Leading SaaS companies spend

more on customer success, … and outperform by achieving
especially for larger accounts… lower gross revenue churn
Number of customer success FTEs Annual Gross Revenue Churn

(FTEs per $1 million ARR) (percent)
0.18 16.4
SMB -40% +11.0%
10-25% 0.30 27.4
Average gross
revenue churn for
Indian SaaS
companies1 0.84 11.8
Mid
Market +9% +12.5%
0.77 24.3
0.57 4.6
Enterprise +90% -4.8%
0.30 9.4
1. Survey of 40 Indian SaaS companies and expert interviews
Sources: team analysis, SaaSRadar

Innovate on growth models
Many Indian companies may need to adopt new business models such as product-led growth,
depending upon their growth stage, product complexity and target customers. (Exhibit 33)
Exhibit 33
Adopt high- or low-touch sales motions depending on maturity, product and

target customer
Product complexity “High touch”

Key takeaways
Highly complex
 “Low touch” or product-led

growth
– Sales motion is primarily digital
– Requires digital self-serve
capability and sophisticated
digital GTM engine
– Entails high marketing spend on
building digital capabilities e.g.
Slack, Dropbox, Zoom
 “High touch” or sales-led growth

– Field sales
– Requires sales reps to interact
with customers to explain
Simple & Intuitive
product features & close sales

“Low touch”
– Digitally enabled salesforce
– e.g. Icertis, Zoho, Freshworks
Target customer segment walks customers through its
SMBs Large enterprise solution to explain value-add
(Developers, Junior enterprise roles) (C-level decision makers)
Sources: team analysis, press search, expert interviews

53
The GTM playbook across key elements also — Pricing: In the initial stages, without
differs depending on the SaaS companies’ a strategic pricing model, companies
growth stage for example, learn and adapt as they grow, gaining
pricing discipline. Companies set up
— Demand generation: Lead generation
dedicated deals desks with tighter rules
is digitally supported with basic SEO/
and thresholds for discounting, and tailor
SEM in the nascent stage, versus having
packaging and bundle offers by customer
programmatic lead generation and
segment.
sophisticated SEO/SEM with lead scoring
and filtering in the growth stages. — Churn and renewals: SaaS companies
Companies enable digital marketing start by developing technology-enabled
through collateral, videos and demos, interventions to identify high-risk
and invest in customized marketing. customers and trigger outreach such
as automated emails. As companies
— Sales Coverage: Companies move from
grow, they add dedicated customer
“founder-led” sales supported by small
success managers, policies, processes
investments in marketing without a
and systems for improvement, and use
formal sales organization in the nascent
analytics-based interventions to reduce
stages to building dedicated teams for
customer churn.
each function and geography supported
by a robust inside sales engine, and use
direct and indirect channels in the growth
stage, depending on the target accounts.
Build industry leading product capabilities
To keep pace with global competitors, India technical skills but lack the business
may need to increase the size of talent pools orientation needed to compete on the global
by three to six times in product management, stage as PMs. (Exhibit 34) As per a survey by
R&D, sales and marketing, and services and SaaSBOOMi about 77% of SaaS leaders in
support – a major challenge. At a global level, India say their biggest challenge is ramping
best-in-class product managers serve as up critical talent, including product managers,
“mini CEOs” for their products, while Indian product engineers, product designers and
SaaS companies tend to rely on engineers product operations.
turned product managers who have strong

Exhibit 34
India SaaS may need 3-6X more talent overall by 2030, especially in product management
Availability Needs in Growth Indian SaaS players need to solve for

Key roles2 in 2020 (est.) 2030 factor c h a l l e n g e s o n P M c a p a b il i t y to s c a l e
Software
16-50K 100-160K 3-6X
~77% PMs hired by large tech
developer companies3 in India do not
have prior PM experience
Product
1.3-3K 8-10K 3-6X Gap for India vs. global
Manager
average4 on key product
25-40% management capabilities
Marketing 1.6-3K 8-10K 3-5X
 Domain & Product
Knowledge
Sales 5-10K 25-35K 3-5X
 Product Management &
Product Planning
Total1 40-100K 300-400K 3-6X  Degree of Innovation in
their current product
1. Talent availability and need across Indian pure-play SaaS companies and Top ~80 Global SaaS majors having offices in
India across all functions
2. Software Developer - Considered Engineering, Information Technology, Research and Quality Assurance functions. Product
Manager - Considered Product Management function. Marketing - Considered Marketing Function. Sales - Considered
sales and business development functions
3. Large tech companies include google, amazon, Microsoft etc.
4. Global Average includes 900+ projects from various geographies beyond US& Europe and India
Sources: LinkedIn sales navigator (# by functions), team analysis, expert interviews, Numetrics Benchmarking, Belong Research
Product Manager Survey
Indian SaaS companies may need to work certifications and short-term training for
closely with the ecosystem to scale their product management and design talent.
talent and ensure readiness. They could
— Building at-scale internship programs
consider focusing in five areas:
for practical learning to bridge talent
— Mentorship initiatives and academic gaps in key roles such as developers, PMs
programs to impart R&D knowledge to and sales and marketing talent.
students. At Freshworks Academy, for
— Adopting innovative recruiting
example, 14,000 students have been
strategies such as hiring in tier-2
trained in customer service30. Zoho
locations. Zoho has more than 650
schools have produced 1000+ graduates
employees in tier-2 cities today and plans
in 15 years – more than 10% of the
to create five to ten rural offices32.
engineers at the company31.
— Providing employees with distinctive
— Building product management,
value propositions across benefits &
design, operations and development
compensation, mentorship, career paths,
capabilities, such as by having senior PMs
employee experience and an open and
mentor fresh PMs, and providing domain
feedback-oriented culture. (Exhibit .35)
30 https://www.freshworks.com/company/join-freshworks-academy-blog/
31 https://www.zohoschools.com/
32 https://www.constructionweekonline.in/people/18274-hub-and-spoke-office-model-and-the-rise-of-tier-2-and-3-cities

55
Exhibit 35
Players could consider focusing on five areas to maintain founder-led cultures as they scale
Key areas Best Practices Examples

Employee first attitude from day 1 Employees are valued, heard and
encouraged to be themselves
Understanding employee
expectations and catering to their Runs a weekly pulse survey –
Employee at needs dashboards created for managers who
center feel it very important to listen; Workday
Learning helps managers with resources
to improve team culture
Leaders responsible set context Spotify is organized in squads of 8-10

and not dictate work to employees people and each squad is provided with
Independence complete autonomy on the end to end
Provide employees 100% control of
and autonomy design and planning of the product they
their work and make then
are building.
responsible
Dedicated time to work on special Ship IT projects – 24 hour hackathons to

projects work on anything of interest. Jira was a
product of Ship IT ; permission to work
Regular competitions/ hackathons
on special projects 20% time
Fostering
innovation Provides any employee who asks, a box
filled with stationary, snacks & $1000
pre-paid credit card to work on their
idea with no questions
Feedback process independent of Netflix has no reviews; employees

the review process continued based on if manager would
fight to keep them in the company
Encouraging peer to peer feedback
(keeper test); Weekly check-ins to foster
Feedback
Target setting: focus on “real frank and informal performance
culture
value” drivers dialogues
Individual objectives and key results
(OKRs) set by employees themselves
Leaders to provide constant Adobe provides research programs,

mentorship to teams mentorship opportunities, on-demand
online courses & leadership
On demand courses and learning
Learning and development programs. Their
programs
mentorship encouragement of employee
development is unique with a learning
fund of up to $10,000 per year for
degrees and certain certifications.
Source: Expert interviews, team analysis, press search

In addition to building product capability, the take a data driven approach to creating
other critical unlock is developer velocity, transparency across the development
particularly on features and products that lifecycle – establish a baseline of current
drive growth. As companies grow, issues like productivity of each team, identify the
technical debt, insufficient automation and roadblocks slowing down the developers, put
code fragmentation become challenges that in place capacity to address those challenges
can grow in a software engineering black and track improvement against the baseline.
box. Developer capacity gradually shift to Further, using developer tools like Jira to
core product with less than needed capacity drive feature level resource optimization
deployed on next-generation features such that developer capacity is allocated
and products. The key to solving this is to sufficiently to growth is key. (Exhibit 36)

57
Exhibit 36
Indian SaaS players could improve next-gen product excellence to increase the velocity of
product development
Key unlocks from

next-gen product dev
3X 15-20% 60pp 20%
reduction in time increase in improvement in increase employee
to market developer velocity customer NPS engagement
Product management
Coding/
develop-
ment
Release Product
and throughput
delivery
Testing
1 PM maturity and capabilities 5 Release & delivery

 PM as mini CEO  Weekly/monthly releases, release critical
 UX embedded in each team; company-wide updates in a day
design language  Automated releases
 High levels of A/B testing
Organizational structure  Granular telemetry measuring user experience
2
 Fully co-located cross-functional agile
pods, tenure (e.g., pyramid, spans and 6 Engineering practices
layers), role ratios  Core practices include code re-use, automated
Product portfolio strategy test runs, fully automated builds
3  Empowered engineering talent accountable for
 Balanced portfolio by shifting R&D spend
quality and outcomes
away from EOL, Declining, and Stable and
reinvest towards Growth, Hypergrowth, and  Open source usage
Intro products  Investments in modern tools & stack; Loosely
coupled architecture; Self-serve, auto-scaling
Zero-Based budgeting & Operational infrastructure
4 transparency
7 Balanced workload with feature content,
 Zero-based budgeting (e.g., existing quality and scope
roadmap delivery, health activities, new
product investments) and operational  Allocate released resources to investments
transparency
(e.g., KPI dashboard, OKR methodology) to
effectively allocate and track spend and
performance, towards growth areas
Sources: Expert interviews

High-growth SaaS companies consistently invest 1.5-2X more in R&D as a share of revenue
than low-growth companies and drive at double the valuation multiples. Indian SaaS
companies could slash their time to market by two-thirds while improving customer net
promoter scores by 60 percentage points through at-scale adoption of these next-gen
product development excellence practices33.
Continually build and rapidly scale new businesses

SaaS players, unlike those in traditional software and IT services, need differentiated
products that alleviate pain points in specific micro-segments. Hence, as founders in India
think about launching SaaS offerings, they will need to adopt a “micro-domain” approach
(Exhibit 37) to identify attractive use-cases and then develop products for key user personas in
these domains.
Exhibit 37
Micro-segment markets to find strategic growth hotspots
“Micro domain” approach to identifying

attractive offering areas Examples
Vertical - Horizontal Dev tools + Infra.

Segments specific SaaS a p p l ic a ti o n s SaaS
Retail CRM Developer tools

Sub-segments
Restaurant Omnichannel Software quality
customer and lifecycle tools
Function-specific engagement
use cases
POS system Customer support Backlog and task
management
Personas
Restaurant Small business Developer
owner owner
Sources: Team analysis, Expert interviews
For example, SaaS companies could review the domain roadmap (Exhibit 38) for high-potential
“here and now” domains such as omnichannel engagement in specialty retail. In these
domains, they could define product-market fits around next-gen disruptions for key customer
personas such as small busines owners. (Exhibit 39)

59
Exhibit 38
Indian SaaS companies could identify high-priority use cases in select sub-verticals
Growth opportunities across three horizons based on SaaS player concentration and industry maturity
Illustrative & Not Exhaustive
SaaS player concentration
High (Potential Medium (Potential Low (Potential Horizontal use cases

H1 – “Here & Now”) H2 – “Microscopic”) H3 – “Telescopic”) for the vertical
Retail Banking Specialty Retailers Tertiary Healthcare
Open banking & 3P1 (including

Assortment optimization Remote healthcare monitoring
core banking modernization)
Comprehensive claims Merchandising, pricing and 360° patient engagement and

management solutions promotions care
Digital lending and credit risk Omnichannel customer

Clinical trial acceleration
solutions engagement and experience
Digital lead generation and Customer loyalty & Regulatory reporting and
management personalization compliance
Inventory and warehouse

Collaboration tools Population health management
management
Digital payments architecture Demand forecasting and

Digital quality management
enable-ment and management planning
Card issuance, renewals and

Store of the Future
management
Regulatory and risk E-commerce – step- change in

management adoption
360° customer analytics POS transactions and pricing
Workflow management Logistics and last-mile

solutions distribution
Digital marketing
Order management
Sources: Team analysis, press search, expert interviews

Exhibit 39
Example: Fast-growth SaaS players identify unmet needs across customer personas in
prioritized sub-verticals
SaaS players offer products cutting across use cases or specific to a use case for the target persona
Illustrative
Small
business owner
1 Marketing and personalization 5 Account management and administrative

Personalized emails and SMS, loyalty rewards work
program, gift cards and generating Software used for recordkeeping, tax payments,
offers/discounts e-way bills etc.
2 Customer Feedback 6 Financing and credit management

Collection and analytics on customer feedback Software tools that help with direct
through emails, kiosks, SMS etc. financing/EMI options and that help with
collection of credit offered to customers
3 POS systems and Inventory Management 7 Logistics services

Systems for billing, payments and real time Online tools helping with services such as
monitoring of the inventory available warehouse management, deliveries etc.
4 Order management 8 Food waste management

Systems helping with omni channel order Tools providing alerts on items with low shelf
management life such as groceries and other edible foods
1. Lower player concentration in the space of browsing of store items
Sources: Press search, team analysis

61
Diversifying portfolios could help drive the deep understanding of customers’ key issues
next phase of growth for SaaS companies. to identify where value can be created. When
Globally, players have significantly raised to diversify into a new product segment
revenue growth by adopting multi-product or offering depends on multiple factors
strategies. Shopify, for example, has including the size and growth stage of the
sustained growth of about 80% thanks to company and target market. Fragmented
its launch of Shopify Payments, which is markets and those with heavy competition,
growing at about 120%. (Exhibit 38) Toast for example, may necessitate an earlier shift
diversified from its core restaurant POS to multi-product strategy. Also important is
business to provide payroll and payments the proportion of the customer value chain
services to capture a category-leading served by the core product – the higher the
position. Twillio grew by 10x in just four years share, the less need to diversify early – and
by building email and SendGrid products expansion strategy. A volume play could aim
in addition to its core voice and video chat to get micro-products to as many customers
offerings. (Exhibit 40) as possible, requiring a need to diversify
earlier as the core product hits a plateau,
To build multi-product businesses,
while a value play may usually mean hitting
companies may need a customer-led
the plateau much later.
approach to product development and a

Exhibit 40
Companies need to build new businesses at the right time to sustain growth
Case example
Total revenue (USD Mn)
Shopify launches Shopify payments – fully Shopify Payments

integrated credit card payment processing for now exists in
its e-commerce platform 15+ countries
~23 ~50 105 205 ~390 ~670 ~1,000 ~1,500 ~3,000
31 ~60%
46 43 41
55 48
63
76 About 80%
84 CAGR over the
last 8 years
driven by Shopify
69 ~120% Payments
54 57 59
45 52
37
24
16
2012 2013 2014 2015 2016 2017 2018 2019 2020
Total revenue (USD Mn) x% Revenue CAGR %
1,762
Twilio acquires Send
Grid start of 2019
1,135
650
Sustained
CAGRof about
399
65% with
SendGrid
acquisition
277
167
89
50
2013 2014 2015 2016 2017 2018 2019 2020
~65% ~45% ~60% ~75% ~55%
Sources: team analysis, press search, annual reports

63
A recent example of this multi-product approach is the Rappi “superapp,” which expanded
rapidly from one core vertical, e-delivery, to five verticals with a platform-led approach.
(Exhibit 41)
Exhibit 41
Rappi took a platform approach to gain more than 20 million users in Latin America
Average of
+60 app
Payments Deliveries openings
per month Impact of “SuperApp”
for high-loyalty approach
users
Increase in installs
5x in 18 months
eCommerce Cash Increase in first

NGOs 2.5x orders
Anything Loyalty
Groceries Services 15% Reduction in CAC
Convenience
Increase in
2.5x retention rate
MoM ARR growth

Games 12% rate
Rappi 1.0 Rappi 2.0

 $200-million ARR Colombian SaaS  Multi-vertical “SuperApp” company
and app company with presence in with presence in 4 key verticals:
9 countries and 200 cities restaurants, supermarkets, E-com
 Founded in 2015 as an on-demand and entertainment
delivery company  Expanded into travel via acquisition
of NetActica
Source: “Press search – Entrepreneur.com, Jampp; Amplitude Case Study, Raapi website
Indian players using platform approaches to build product portfolios have also done well.
Eka, for example, scaled with a low-code platform to roll out new products in 18-24 months34.
It cut time to launch new products by two-thirds through platform usage and planning for
second products, reaching $20 million in revenues. Similarly, Zoho’s Zoho One platform allows
it to roll out new products every 9-12 months35.
34 https://eka1.com/wp-content/uploads/2020/08/Eka-Platform-2-BR-2020.pdf
35 Tech Crunch, Expert interviews

Concerted support from the ecosystem
To thrive in the disruptions likely to play out in the next five years, the entire industry may need
to take concerted actions. Industry associations such as SaaSBOOMi and NASSCOM, investors,
corporate enterprises and the government must all work together to help India emerge as a
clear winner in SaaS. (Exhibit 42)
Exhibit 42
Success may require concerted support across the ecosystem
 Drive large-scale skilling programs, certifications and degrees for key

SaaS roles (especially product engineer, product manager, product
Industry designer, product ops)
associations  Support new SaaS startups with Playbooks for growth in SaaS,
Bootcamps, SaaS business operations 101 etc.
 Convene global leaders and Indian ecosystem to drive long term growth
 Promote ease of doing business by offering support to companies to be

based in India and ease the regulatory environment for investments &
exits
Government  Support skilling initiatives by providing access to educational
infrastructure (e.g., university partnerships for specialized degrees)
 Boost domestic demand by increasing govt. procurement and incentives
for MSMEs
 Partner with start-ups to share domain expertise, and consider corporate

venture investing
Corporates  Co-develop products with SaaS startups and fuel innovation
 Cloud Hyperscalers & IT Service Providers could consider SaaS
enablement programs
 Drive awareness about potential in SaaS in experienced talent pools, and

provide access to global network, mentorship
Investors  Increase outlay for seed/early-stage companies
 Spur grass roots entrepreneurship (e.g., incubation programs;
entrepreneurship cells)
Source: Expert interviews

65
Industry associations: Evangelize SaaS and mentor startups
Industry associations could play pivotal roles in spurring SaaS entrepreneurship, shaping the
industry perspective, bridging the talent gap and mentoring startups.
They could collaborate with the government, academic institutions and SaaS unicorns to
develop skill-building and training programs for key roles such as product management,
product engineering, product design and product operations with possible action in five areas:
— Define and establish training and — Facilitate centralized placement and

certification standards for key roles. internship assistance with leading
The AI Singapore initiative includes Indian and MNC SaaS companies in
a four-level AI certification program partnership with universities. In 2018, the
using a combination of online tests and EU rolled out the Digital Opportunity
assessment interviews36. The NASSCOM program, targeting 6,000 internships
FutureSkills initiative has developed through the ERASMUS program by
a similar framework for the Indian IT / 202036. The program enabled more
ITES industry across 150+ skills and 70+ than 7,000 internships in just one year.
job roles37. A similar framework could be While individual SaaS leaders such as
considered for critical SaaS skill groups Freshworks are offering these programs,
scaling this model at the industry level
— Partner with universities to provide
could be considered38.
specialized programs in next-gen
SaaS technologies. Estonia’s leading Industry associations could also help
universities, for example, have launched create structured mentorship programs for
master’s programs in data science new SaaS companies. These could include
and AI36. benchmarking performance, crafting growth
playbooks by scale and type of company,
— Establish tie-ups with certified vendors
creating mentorship bootcamps, and so on.
for training in SaaS-specific niche
skillsets. Academy Cube, an online They could play a key role in representing the
learning platform supported by the Indian SaaS community, hosting conferences
European Commission, offers courses such as the SaasStr event that draws more
on Industry 4.0, IoT, big data and cyber than 50,000 executives39 from around the
security36. NASSCOM FutureSkills has world, and industry meetings involving
developed a partner ecosystem of 30+ global SaaS majors, Indian players, investors
training vendors for the Indian IT/ITES and enterprises to create networking and
industry37. marketing opportunities.
36 NASSCOM Future of Technology services report 2021

37 NASSCOM Future Skills website
38 https://www.freshworks.com/company/join-freshworks-academy-blog/
39 https://www.saastr.com/event-sponsorship/

Investors: Leverage your expertise
The increased attention of global venture capital and more recently private equity is a positive
trend for all investors, as the influx of capital increases the value of target firms.
Investments are rising in the Indian SaaS industry, including about $1.5 billion in VC funding in
2020 alone, according to Pitchbook40. The sector is likely to remain attractive – more than 60%
of Indian SaaS founders surveyed expect growth in both domestic and international funding.
More may be required, however. India may likely need to triple or quadruple funding to
achieve its full potential in SaaS. (Exhibit 43) The Indian SaaS space also has had limited exits
via acquisitions, buyouts or IPOs so far – only 5-10%40 of Indian companies had exits in the
last decade, compared to 20% of their US counterparts, according to Pitchbook. Significant
development of exit routes will drive the virtuous cycle of value-creation.
Exhibit 43
Indian SaaS remains attractive for investors though funding needs may need to grow by
3-4X, especially in early stages
Seed stage Early stage Late stage
5%
16%
3-4x
25%
$~380 $~1520 Increase in annual funding

million million
11% needed to support Indian
65% SaaS companies1
79%
2018 2020
1. Assuming funding efficiency of 0.87 (aspiration to improve from current ~0.5), projected till 2025
Source: Pitchbook; Crunchbase, Team analysis
Investors’ deep expertise is necessary to support the ventures’ growth. Investors may
therefore focus on a few selected domains and expand their teams with relevant experts
to provide mentorship and counsel in operational areas and provide portfolio companies
with more access to global networks and the larger ecosystem. Investors could help spur
entrepreneurship with little risk by building incubation programs for early-stage SaaS
companies and could also provide training on exit strategies.
40 Pitchbook analysis

67
Government: Enable a regulatory framework to spur growth
The government could help increase domestic growth companies in India have already been
demand to drive growth for Indian SaaS launched in India41 and may need acceleration
companies. It could increase procurement, by the government over the next few years.
for example, and provide incentives to micro, Government could also encourage new exit
small and midsized enterprises to invest in formats such as special-purpose acquisition
digitization with Indian SaaS products, and companies (SPACs) and boost the funding
support the development of an “India stack.” momentum by infusing Software/ product
development specific funds.
The big challenges in industry today include
taxation and impediments to doing business. Government could also partner with
The government could offer waivers in IGST universities for specialized SaaS courses and
RCM, ease regulations, remove restrictions on skilling programs. Many SaaS companies
charging cards for recurring payments, and in India are individually engaging with
create a more generally suitable environment universities / education boards to develop
for companies to list in India. Programs such SaaS-specific curriculum and skills programs.
as the Innovators Growth Platform (IGP) A concerted effort at the industry level may
framework have been initiated by SEBI to be required to scale these initiatives over the
ease the listing requirements for high next decade.
41 https://www.sebi.gov.in/sebi_data/meetingfiles/mar-2019/1553245431351_1.pdf

Corporates: Develop SaaS startups as true partners
The Indian B2B SaaS sector is thriving and incubators to partner with Indian SaaS
innovating at a great speed, which presents players and co-develop offerings. Apart
a great opportunity for Indian corporate from sharing domain expertise, corporates
enterprises. To realize all of the potential could also develop training programs for
benefits, however, established companies in middle management at SaaS companies and
India may need to move more boldly into the help nurture the talent needed to grow the
SaaS startup landscape. Many US tech titans industry.
have shown that these strategies could be
Indian IT services majors are starting to
highly successful, incorporating a significant
partner with SaaS startups to provide reach
number of startups over time – some of
for professional services and implementation.
which have contributed core products to the
A leading Indian IT services provider
product portfolio42.
partnered with Zoho, for example, to provide
There is a great opportunity for corporates CRM, ITSM and e-commerce solutions to
to support startups from the beginning, large and medium-sized businesses globally
co-develop products to suit their needs, to grow its SMB segment43.
and create innovation pipelines for
Hyperscalers could support SaaS companies
domain-specific solutions. Senior corporate
via strategic partnerships to provide access
management may need to be less hesitant
to the latest technology and global markets,
about partnering with startups in the first
impart education, training and certifications
place. Many Indian conglomerates have
in cloud platforms at low cost to develop
already established corporate VC arms to
domestic talent, and provide funding through
invest in the Indian SaaS ecosystem, and
incubation and mentorship programs.
some multinationals in India have set up
42 Expert interviews
43 https://www.businesswire.com/news/home/20201111005860/en/Zoho-Announces-Partnership-With-
Tata-Consultancy-Services

69
05
The next decade:
India’s SaaS industry
comes of age
With the rapid increase in digitization since product talent pool. To continue and scale up
the pandemic started and emergence of its remarkable growth, the Indian ecosystem
new tech-native, tech-first enterprises, the including startups, investors, government,
growth opportunities for SaaS companies are corporations and industry associations could
limitless. rally as one.
India has the world-class talent, energy, SaaSBOOMi can help bring people,
imagination, knowledge and unmatched companies, government, universities, investors
commitment to meet the needs of customers and customers together to drive innovations
and thrive and prosper at a global scale. that we cannot imagine today, enabling
To achieve this aspiration, Indian SaaS the Indian SaaS ecosystem to achieve a
companies may need to shift to a “hyper leadership position over the next decade,
growth” mindset, firing on all three of its joining the Indian technology services industry
engines – GTM, product and new business in global preeminence.
building – while incubating a world class

71
DISCLAIMER
This report is intended for educational purposes

only and does not replace your independent
professional judgement. The content in the
report are a matter of our professional judgment.
Views, if any, expressed in this presentation are
based only on the facts set out herein and it is
assumed that no other fact relevant or material
is in existence. Changes in facts can result in
different conclusions. Statements of fact and/
or opinions if any expressed in this report are not
the opinion or position of the organisations that
the presenters are a part of or of SaaSBOOMi’s
sponsors.
SaaSBOOMi does not endorse or approve,

and assumes no responsibility for the content,
accuracy or completeness of the information
presented nor the figures or calculations arising
from this information. Under no circumstance
shall SaaSBOOMi be liable in any way for any
loss or damage (whether under contract, tort,
equity or otherwise) arising from any reliance on,
or use of, information / content available on this
page in this report
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Shaping India’s

Shaping India’s SaaS Landscape

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This report was developed by SaaSBOOMi, which led a comprehensive

We are thankful for the support, guidance and dedication of the

A special acknowledgement is due to Avinash Raghava and the entire

6 Shaping India’s SaaS Landscape

We had one-on-one conversations with the following webinar participants

Aakash Tulsani Karthik Reddy Rohit Chennamaneni

Abhinav Asthana Karthik Vasudevan Sameer Verma

Alok Goyal Mayank Porwal Sanjay Nath

Anand Jain Monish Darda Shweta Bhatia

Aneesh Reddy Pallav Nadhani Sparsh Gupta

Arpit Maheshwari Praval Singh Sudheer Koneru

Ashwini Asokan Prayank Swaroop Suresh Sambandam

Bhanu Chopra Rajaraman Santhanam Varun Shoor

Dev Khare Rishit Desai Yamini Bhat

Shaping India’s SaaS Landscape

Shaping India’s SaaS Landscape

1 NASSCOM-SaaSBoomi : Riding the Storm report July 2020, IDC

Shaping India’s SaaS Landscape

Of the $3-trillion global enterprise IT and communications spending market, software,

Enterprise tech spend and

1. Includes business applications, infrastructure and vertical specific software

2 Gartner Enterprise IT spending report by Vertical Market : Worldwide 2019

Shaping India’s SaaS Landscape

The software industry overall has been consistently resilient

S&P 500 Index S&P 500 Revenue S&P 500 EBITDA

7% Growth in S&P -13% Growth in S&P

Source: CP Analytics; team analysis, Capital IQ

14 Shaping India’s SaaS Landscape

Sources: S&P 500, CPAnalytics, Capital IQ

3 IDC Public Cloud services Spending Guide – Forecast 2021

Shaping India’s SaaS Landscape

Enterprise tech intensity likely to amplify to about 5% in the next decade

2010 2020 2030E Incumbents 3% 3%

1. Analysis based on G2000 companies as ranked by Forbes, N=2000

​ he pandemic has accelerated digital transformations as companies, universities and

5 NASSCOM Future of Technology Services report 2021

16 Shaping India’s SaaS Landscape

Post-Covid, SaaS-enabled disruptions would cut across industries creating tremendous

Remote and automated

Focus on supply chain resilience

Shift to digital marketing/ sales

Automation / AI become central

Shift to contactless UIs

Sectoral Banking & insurance Public sector, education

Retail, apparel & CPG Healthcare & PMP

Automotive & manufacturing

1. Analysis based on G2000 companies as ranked by Forbes, N=2000

Shaping India’s SaaS Landscape

Microsoft 22.0 34% 57%

Oracle 9.1 33% 47%

Intuit 3.3 23% 11%

Salesforce 13.3 53% 26%

he pandemic has accelerated digital transformations as companies, universities and