India’s Software-as-a-Service market may grow to $1 bn

Globally, the SaaS market in 2015 was worth $31 billion

SaaS is a pay-as-you-go software distribution model. File photo.

The Software-as-a-Service (SaaS) market in India is expected to triple to about $1 billion by 2020, according to a research report by Nasscom.

The demand will mainly be driven by business’ looking to focus more on their core operations.

The market for SaaS, a pay-as-you-go software distribution model, was pegged at $300 million in 2014-15. For 2015-16, it is expected to be worth $407 million.

The research points out there are over 150 firms offering solutions in the SaaS segment, with start-ups driving the segment. About 40-45 per cent of the companies in the segment are start-ups.

“Investors are showing keen interest in a number of start ups. India SaaS based products have received close to $450 million in the first two quarters of 2015,” according to the report.

Over $170 million was invested in such start-ups in 2014 across 22 deals. Further, the number of such deals has already doubled to 22 in 2014 from 11 in 2011. “With 60 per cent of the funding received post 2012, more start-ups are gaining access to funding in the past 5 years,” the report said.

Third party vendors

Listing out reasons for the shift to SaaS model from on premise software solutions, the research report stated that organisations can shift resources from operational items such as IT to core competencies, reduce IT fees due to reduced amount of services, software and support needed from IT, reduce time and costs to upgrade software since it is handled by third party vendors.

Increased focus on content solution being deployed over mobile devices is also pushing firms to opt for SaaS-based products. Healthcare, BSFI, e-commerce and education are some of the prominent verticals in SaaS adoption.

The U.S. and Europe account for more than 80 per cent of the demand for Indian SaaS solutions, according to the report.

Globally, the SaaS market in 2015 was pegged at $31 billion and expected to growth at 18 per cent annually to $72 billion by 2020.

Big players like Salesforce, SAP, Oracle, IBM and Microsoft occupy almost 50 per cent of the global SaaS market.