This integration of AI technologies such as machine learning (ML), natural language processing (NLP), and advanced analytics into SaaS platforms helps make software more intuitive, adaptive, and capable of automating complex tasks.
“We expect the SaaS market to get to $50 billion in the next six years because there is a massive tailwind coming from the AI and the generative AI world. We believe India’s SaaS sector is fundamentally transitioning to what we call as IndAI SaaS,” Anant Vidur Puri, partner at Bessemer Venture Partners told ET.
The report, titled ‘The Rise of SaaS in India 2024’ surveyed around 100 SaaS startups with annual recurring revenue (ARR) ranging from $3 million to $200 million, Puri said.
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Further, the report forecasts that Indian SaaS centaurs and unicorns will generate $20 to $25 billion in revenue by 2030. India-first companies like Perfios, Bill Desk, and Razorpay are expected to achieve an ARR of $5 billion by 2023, while global-first companies such as Zoho, Amagi, and Icertis are projected to reach an ARR of approximately $17 billion in the same period. Collectively, these unicorns and centaurs added $5.9 billion in revenue during 2023 alone.
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In 2024, India saw two new SaaS unicorns: Perfios and Krutrim.Centaurs are defined as startups with valuations exceeding $100 million, while unicorns are those valued at over $1 billion.
The report also noted that between 2022 and 2023, over 100 companies achieved revenues between $1-5 million, and nearly 40 companies between $5-10 million.
ETtech“This data tells that the adoption of software in the ecosystem is going up and more people are ready to trust smaller companies which come and implement in their environment,” Puri added.
Also, total investment in Indian SaaS startups this year is on track to surpass 2023 levels. The companies in the sector have raised $0.53 billion in the first half of 2024, compared to $0.9 billion in 2023, the report showed.
“AI has been an undeniable catalyst for Indian SaaS. It has accelerated our ability to move swiftly and decisively in the market. Indian entrepreneurs are combining their product strengths with complementary services, to deliver capital-efficient results. At Everstage, we are incredibly excited about the potential of AI and are rolling out new modules with this technology at its core,” Siva Rajamani, cofounder and CEO of the SaaS startup Everstage said in the report.
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Cyber security takes centre stage
As Indian SaaS companies increasingly adopt AI into their operations, the risk of cybersecurity threats has risen correspondingly. The report reveals that domestic consumption of cyber software and services surged to $6 billion in 2023, up from $3.4 billion in 2021.
Also, the number of cybersecurity professionals in India has more than tripled over the past three years to around 300,000. Most companies plan to boost their cybersecurity budgets by 6% to 15% in the next 12 months, further propelling market growth.
“At Perfios, cybersecurity is integral to our vision of transforming financial data management. By implementing state-of-the-art security measures, we ensure the integrity and confidentiality of our clients’ data,” said Sumit Nigam, chief technology officer of Perfios in the report.
Bessemer Venture Partners has been investing in India since 2006. Its global portfolio includes companies like Pinterest, Shopify, and LinkedIn. In India, Bessemer is an early investor in companies such as MediAssist, Swiggy, Urban Company, Bigbasket, Perfios, Livspace, Pharmeasy, and The Good Glamm Group.