Indian SaaS ecosystem is anti-fragile; global recession a concern, not a deterrent

The Indian (Software-as-a-Service) SaaS industry has shown incredible resilience in the face of funding and recessionary challenges, and reinforced its antifragility in the past year. With Indian SaaS companies doubling down on revenue generation while ensuring operational and capital efficiency, 2022 has been a year of normalization. Despite the funding value, valuation multiples, and deal values witnessing a normalization, the latest Zinnov-Chiratae India SaaS report 2023, titled, “India SaaSonomics: Navigating Growth and Efficiency,” projects a ~2.5X growth to reach USD 26 Bn in revenues by 2026.

The Indian SaaS ecosystem is antifragile; global recession is a concern, but not a deterrent

• Despite a funding winter and recessionary challenges, a survey by Zinnov and Chiratae Ventures found that 93% of founders surveyed, anticipate an increase in revenues in the next 12 months.
• Amidst the wariness due to global macro-economic headwinds, 9 out of 10 investors continue to believe in the India advantage and are investing in existing and newer growth areas.
  2022 and the first few months of 2023 witnessed layoffs across organizations, across the world. However, 96% of the Indian SaaS unicorns and potential unicorns grew their headcount throughout 2022.
• Though many an Indian start-up – including SaaS start-ups – experienced funding challenges, seed-stage funding witnessed a 1.5X increase, while early-stage funding saw a notable 1.6X surge in value during 2022.
• Interestingly, Indian SaaS start-ups secured 3X more funding in 2022 compared to 2019 (pre-pandemic era), demonstrating a steady CAGR of 47%.
• The employees of 21 Indian SaaS unicorns have founded 185+ SaaS start-ups, with 60% of them being set up in the last 3 years alone.

So, what’s next for SaaS in India?
The next phase of innovation across SaaS categories will be led by DevOps, Cybersecurity, and Vertical SaaS. Additionally, India takes the lead in AI product development, thanks to housing ~16% of the global AI workforce, especially given the latest trend of Generative AI and surrounding use cases. India is also emerging as a leading player in the global Web 3 market, backed by housing 11% of the global Web 3 talent, which is growing at the fastest rate.

CT Bureau