Venture capital firm Bessemer Venture Partners (BVP) projected that the Indian software-as-a-service (SaaS) industry is expected to reach $50 billion by 2030, and companies and unicorns to generate revenues of $20-$25 billion by 2030.
The market size of Indian SaaS would grow from $13 billion in 2022 to $25 billion by 2025, $35 billion by 2027, and $50 billion by 2030, the report added.
As per the report, the number of companies with more than $100 million annual recurring revenue (ARR) went up to 11 in 2023, as against nine in 2022. Companies with $50-$100 million ARR went up to 16 in 2023 from 12 last year.
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A significant chunk of the companies that will contribute to the $50 billion ARR tally will be ones who would not have exhausted any more than $100 million of equity-based capital by 2030, said BVP partner Anant Vidur Puri.
Unique advantage
Indian SaaS companies have a unique efficiency advantage that will allow them to benefit in the current macroeconomic climate, said the Bengaluru-based company. A rich pool of artificial intelligence and software talent in India has positioned SaaS companies for strong growth, it added.
While there were no new unicorns in 2023, amid tough funding environment and tight macroeconomic conditions, as against around nine of them registered by this time last year, BVP reported addition of three new centaurs — private SaaS businesses crossing a $100 million ARR mark — in 2022.
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The three were Chargebee, Gupshup and Postman. “Three centaurs on a base of eight is actually almost a 37% increase in centaur creation. The ecosystem is growing really strongly, you’ve got more companies selling more software, generating more revenue. The unicorn concept is actually very misleading, because it tries to link fundamental business metrics to externalities founders have no control on,” Puri added.
The forecast drivers on SaaS as a sector included Indian companies’ efficiency advantage to aid them on their path to global leadership, new cloud infrastructure’s ability to power traditional financial services, Unified Payments Interface creating SaaS and infrastructure opportunities, pharmaceutical industry’s adoption of cloud software and AI-first companies leading productisation of services.