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SaaS firms to reach $35 bn in revenue in 5 years: Report
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IANS | 25 Jan, 2023
Indian software-as-a-Service (SaaS) companies are poised to command 8
per cent of the global SaaS market, generating $35 billion in annual
recurring revenue (ARR) by 2027, a report showed on Tuesday.
It will be a growth of 20-25 per cent per annum for the homegrown SaaS firms, according to Bain & Company's report.
Investment
in India SaaS went up by 20 per cent last year compared to 2021, and
reached an all-time high of $5.1 billion, according to the report.
This
was driven by increased interest in earlier-stage deals -- with
significantly more seed deals that have doubled in size over the past 3
years and a doubling of Series A investments compared to 2021.
"This
ecosystem is being driven by a flywheel comprised of SaaS companies who
are successfully executing on their global ambitions and an investor
base that believes in the potential of Indian SaaS," said Arpan Sheth,
Partner at Bain & Company and lead of the Private Equity and
Alternative Investor practice in India.
"We are now seeing the
emergence of a set of Indian SaaS companies who have a right to win not
just in India, but globally," added Sheth.
Indian SaaS companies'
future trajectory remains promising as their total annual recurring
revenue, of $12 billion-$13 billion in 2022 is up four times over the
past five years.
Of the 1,600 Indian SaaS companies that have now
been funded over the past five years, around 14 of them exceed $100
million in ARR (vs. around 1-2 five years ago) and are reaching this
growth milestone as quickly as their US counterparts, the report
mentioned.
Indian SaaS venture capital (VC) investments were up by 10 per cent in the first three quarters of 2022 compared to 2021.
The
outlook for Indian SaaS investment remains broadly positive over the
next 12 months, with 90 per cent of Indian SaaS investors expecting to
increase or maintain their capital allocation to SaaS.
"Over 70
per cent of Indian SaaS investors plan to increase their investment in
the sector," said Prabhav Kashyap, Partner at Bain & Company and
co-author of the report.
Buyer sentiment in SaaS will remain
broadly positive going forward as well, with approximately 65 per cent
of enterprise software decision makers expecting to increase their 2023
software budgets, said the report.
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