By then, Indian companies will have nearly 8% share of the global SaaS market, the private equity company said in its ‘India SaaS Report 2022’ released on Tuesday.
It said the Indian SaaS ecosystem continues to gather momentum despite prevailing market headwinds and trails only the US in scale and maturity.
Indian SaaS companies’ combined ARR grew four times in five years to reach $12-13 billion in 2022 while investments in the sector soared six times during the same period to over $5 billion in 2022, the report said, adding, “Indian SaaS progress is irrefutable and its future trajectory promising.”
SaaS investments in the country increased by about 20% year on year in 2022 and was boosted by Securonix scooping up over $1 billion, it said.
“However, 2022 has been a game of two halves,” Bain & Company’s report said. “While 2021’s funding momentum carried over into a record first quarter, there has been a subsequent 40% year-on-year decline in investment across quarters two through four as global sentiment has softened.”
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But despite this market slowdown, the report claimed that proven revenue growth combined with attractive margins has made SaaS a comparative bulwark for investors, with Indian SaaS venture capital investment up 10% over Q1-Q3 in 2022.“Indian SaaS companies are proving they can be truly world class, and are scaling rapidly, with 12-14 companies exceeding $100 million in ARR (versus one or two companies five years ago),” it said.
While software buyers’ sentiment softened in the second half of 2022, Indian SaaS companies play in categories that benefit from long-term, secular-demand tailwinds, the report said. “In the future, IT buyer sentiment in SaaS will remain broadly positive, with approximately 65% of enterprise software decision makers expecting to increase their 2023 software budgets,” it said.