India's SaaS Market Set to Reach $50 Billion by 2030, Driven by AI Adoption

India's SaaS market to soar to $50 billion by 2030 riding on AI: Report

India's SaaS market is projected to reach $50 billion by 2030, with a possibility of an upward revision on the back of artificial intelligence (AI), stated a report by venture capital firm Bessemer Venture Partners (BVP). Titled 'The Rise of SaaS in India', the report stated that the Indian SaaS market can triple its revenue by 2030, largely driven by the rapid acceleration of AI. It also underscored the growth potential of the industry, driven by an increased focus on cybersecurity and increasing cloud adoption by the banking, financial services and insurance (BFSI) and manufacturing industries. To further its case, the report listed SaaS unicorns this year, including Krutrim AI and Bessemer portfolio company Perfios. It also noted the addition of three new centaurs in India -- Amagi, ShipRocket and Innovacer -- further solidifying India's position as a global SaaS hub. In 2023 alone, the report said, Indian SaaS unicorns and centaurs collectively added $5.9 billion in revenue. The Bengaluru-based firm said that nearly 60 per cent of start-ups, previously pure SaaS companies, are now evolving into AI-enabled SaaS providers. Accelerating investment In 2024, Indian start-ups are set to attract nearly $1 billion in new venture funding, with AI-focused companies capturing approximately $175 million, the report added. This surge in investment is indicative of a broader trend where AI is becoming integral to SaaS offerings. Notably, 90 per cent of early-stage software start-ups in India have launched at least one AI feature in the past year. Cybersecurity Landscape The Indian cybersecurity market, valued at $6 billion in 2023, is projected to more than double to $13.6 billion by 2025. This growth is fueled by an expanding talent pool, increased budgets, AI-driven threats, and regulatory frameworks such as the Digital Personal Data Protection (DPDP) Act. Notably, despite economic challenges, nearly 50 per cent of Indian enterprises have increased their cybersecurity spending by 5-12 per cent in 2024 alone. . "AI is the next revolution in software, and we expect all software to transition to AI native, AI-enabled, or AI-infused in some way. India is also in a unique position with its large base of AI developers and global leadership in business and professional services. We believe AI will be a big boost to this industry by enabling better margins and higher customer value delivery. In addition to AI, we believe cybersecurity, wealth tech and industrial software are 3 other key trends that will lead the next leg of software growth in India," said Anant Vidur Puri, Partner, Bessemer Venture Partners. SHARE Copy linkEmailFacebookTwitterTelegramLinkedInWhatsAppRedditPublished on August 5, 2024

Indian SaaS sector likely to reach a market size of $50 billion by 2030

The report titled "The Rise of SaaS in India 2024" by Bessemer Venture Partners also added that the Indian SaaS sector is set to undergo a major transformation driven by the rapid adoption of Artificial Intelligence (AI), increasing focus on cybersecurity, and increasing cloud adoption in the banking, financial services, and insurance (BFSI) and manufacturing industries.

92% of Indian SaaS startups adopt AI over the past year: Bessemer report

AI adoption by SaaS platforms helps make software more intuitive, adaptive, and capable of automating complex tasks. The report titled 'The Rise of SaaS in India 2024' which surveyed around 100 SaaS startups with ARR) ranging from $3 to $200 million, said Indian SaaS centaurs and unicorns will generate $20 to $25 billion in revenue by 2030.Nearly 92% of software-as-a-service (SaaS) startups in India have integrated some form of artificial intelligence (AI) features into their products over the past 12 months, with almost 87% of these companies describing themselves as either an AI-native SaaS or an AI-enabled SaaS, according to a report by venture capital firm Bessemer Venture Partners. This integration of AI technologies such as machine learning (ML), natural language processing (NLP), and advanced analytics into SaaS platforms helps make software more intuitive, adaptive, and capable of automating complex tasks. "We expect the SaaS market to get to $50 billion in the next six years because there is a massive tailwind coming from the AI and the generative AI world. We believe India's SaaS sector is fundamentally transitioning to what we call as IndAI SaaS," Anant Vidur Puri, partner at Bessemer Venture Partners told ET. The report, titled 'The Rise of SaaS in India 2024' surveyed around 100 SaaS startups with annual recurring revenue (ARR) ranging from $3 million to $200 million, Puri said. Also read | Indian SaaS in the middle of a great reset in funding winter Further, the report forecasts that Indian SaaS centaurs and unicorns will generate $20 to $25 billion in revenue by 2030. India-first companies like Perfios, Bill Desk, and Razorpay are expected to achieve an ARR of $5 billion by 2023, while global-first companies such as Zoho, Amagi, and Icertis are projected to reach an ARR of approximately $17 billion in the same period. Collectively, these unicorns and centaurs added $5.9 billion in revenue during 2023 alone. In 2024, India saw two new SaaS unicorns: Perfios and Krutrim. Centaurs are defined as startups with valuations exceeding $100 million, while unicorns are those valued at over $1 billion. The report also noted that between 2022 and 2023, over 100 companies achieved revenues between $1-5 million, and nearly 40 companies between $5-10 million. "This data tells that the adoption of software in the ecosystem is going up and more people are ready to trust smaller companies which come and implement in their environment," Puri added. Also, total investment in Indian SaaS startups this year is on track to surpass 2023 levels. The companies in the sector have raised $0.53 billion in the first half of 2024, compared to $0.9 billion in 2023, the report showed. "AI has been an undeniable catalyst for Indian SaaS. It has accelerated our ability to move swiftly and decisively in the market. Indian entrepreneurs are combining their product strengths with complementary services, to deliver capital-efficient results. At Everstage, we are incredibly excited about the potential of AI and are rolling out new modules with this technology at its core," Siva Rajamani, cofounder and CEO of the SaaS startup Everstage said in the report. Also read | SaaS star Postman sees 30-40% cut in valuation in secondary deal Cyber security takes centre stage As Indian SaaS companies increasingly adopt AI into their operations, the risk of cybersecurity threats has risen correspondingly. The report reveals that domestic consumption of cyber software and services surged to $6 billion in 2023, up from $3.4 billion in 2021. Also, the number of cybersecurity professionals in India has more than tripled over the past three years to around 300,000. Most companies plan to boost their cybersecurity budgets by 6% to 15% in the next 12 months, further propelling market growth. "At Perfios, cybersecurity is integral to our vision of transforming financial data management. By implementing state-of-the-art security measures, we ensure the integrity and confidentiality of our clients' data," said Sumit Nigam, chief technology officer of Perfios in the report. Bessemer Venture Partners has been investing in India since 2006. Its global portfolio includes companies like Pinterest, Shopify, and LinkedIn. In India, Bessemer is an early investor in companies such as MediAssist, Swiggy, Urban Company, Bigbasket, Perfios, Livspace, Pharmeasy, and The Good Glamm Group.