IBEF: September 07, 2021
The Indian software as a service (SaaS) business, which has had 5x revenue growth in the last five years due to rapid digital adoption across companies as a result of the pandemic, is set for explosive growth by 2025. According to a survey published by Chiratae Ventures and Zinnov, the market value of SaaS is predicted to surpass that of IT services by 2025-30.
According to the paper titled "Indian SaaS Revolution: Rising Trillion Dollar Global Opportunity," India's SaaS market revenues will expand eight times from US$ 5.3 billion in 2020 to US$ 42.2 billion in 2025 if present growth rates continue. According to the analysis, industry sales will expand 14 times to US$ 75.3 billion by 2025 if fast expansion continues.
With the global SaaS industry anticipated to exceed US$ 400 billion by 2025, Indian SaaS businesses would be able to meet 19% of global SaaS demand in the best-case scenario.
The Enterprise Value to Revenue value multiple of the Indian SaaS industry is anticipated to approach the levels of the US SaaS market in 2025. Based on ambitious growth forecasts, value multiples are expected to rise from 12x in 2020 to 18x in 2025, according to the research.
The number of active SaaS firms has more than doubled in the previous five years, from 500 in 2015 to over 1,000 in 2020. From US$ 1 billion in 2015 to US$ 5.3 billion in 2020, revenue has increased fivefold.
However, Indian SaaS firms generate the majority of their income from outside of India and this trend is expected to continue. In 2020, worldwide revenues contributed 70% of total revenue, which is anticipated to rise to 85% by 2025.
According to the research, just 30% of Indian SaaS businesses are located in India, with the rest situated in the United States.
At 0.8 million people, India accounts for about 25 to 30% of global digital talent. The number is expected to rise to 1.5 million by 2025.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.