New Delhi, 24 January Indian software-as-a-service (SaaS) companies are poised to capture 8% of the global SaaS market by generating $35 billion in annual recurring revenue (ARR) by 2027, a report on Tuesday said.
According to Bain & Company’s report, domestic SaaS companies are expected to grow at 20-25% per year.
According to the report, investment in Indian SaaS increased by 20% last year compared to 2021 and reached an all-time high of $5.1 billion.
This was driven by much more seed deals that have doubled in size over the past three years and increased interest in early stage deals with Series A investments doubling compared to 2021.
Arpan Sheth, Partner and Head of Private Equity, Bain & Company, said, “This ecosystem is driven by a flywheel comprising SaaS companies successfully executing on their global ambitions and an investor base that believes in the potential of SaaS in India.” Alternative investment practices in India.
“We are now seeing the emergence of a series of Indian SaaS companies that have the right to succeed not just in India but globally,” Sheth added.
The future trajectory of Indian SaaS companies remains promising as total annual recurring revenues in 2022 have quadrupled from $12 billion to $13 billion over the past five years.
Of the 1,600 Indian SaaS companies currently funded over the past five years, about 14 have an ARR in excess of $100 million (about 1 or 2 five years ago) and are reaching this growth milestone just as quickly as US companies. there is. the report noted.
Indian SaaS venture capital (VC) investment increased by 10% in Q1 2022 compared to 2021.
The outlook for SaaS investments in India is largely positive over the next 12 months, with 90% of SaaS investors in India expecting to increase or maintain their capital allocation to SaaS.
“Over 70% of SaaS investors in India plan to increase their investments in the sector,” said Prabhav Kashyap, partner at Bain & Company and co-author of the report.
Buyer sentiment towards SaaS will continue to be largely positive, with around 65% of enterprise software decision makers expecting to increase their software budgets in 2023, the report said.