Starting SaaS in India – What the future holds

Last Updated at: Jul 14, 2020
Starting Saas in India - What the future holds_
The India Private Equity Report 2020 says the Indian SaaS market is likely to be worth of $20 billion by 2022 from $6 billion in 2019


Cloud computing is a fast developing model for sharing information technology resources with millions of devices without having to carry information offline to individual computers. With the advance in technology and the Internet age, sharing terabytes of data in milliseconds has now become possible. And with this possibility, have arisen several business opportunities. With the use of Internet, service providers can host several features such as – Platform (PaaS), Network (NaaS), Infrastructure (IaaS), and Software as a Service (Saas).

Software as a service is an IT model where vendors can distribute versions of different software through the cloud that clients can access, subscribe and download from. Through a data centre, vendors can host their software and customers can download it through their standard web browser (Google Chrome, Safari, Firefox etc)

CD-ROM’s and Floppy Disks are no longer a part of Laptops and Computers because all necessary software files are now readily available on websites.

SaaS is now widely used in many general business solutions, such as Accounting, HR Document Management, Customer Relationship Management, Content Management and collaboration.

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How the SaaS Model Earns 

Subscription schemes

Unlike a decade ago when softwares were generally purchased to run till perpetuity for a lump sum cost, SaaS works on a subscription fee model such as an annual or monthly subscription. The setup costs of a SaaS model are generally cheaper than any other software company, primarily because of the ease in distribution. Additionally, with an ever-increasing number of software engineers in a country like India, the cost of development of softwares has been decreasing significantly. This is also one of the reasons for software outsourcing to India.

The economic upside to having a large user base

With an investment in a stable and resilient “Server”, SaaS vendors can easily scale their services to any part of the world at competitive prices. Further, Cloud Computing provides the advantages of “multitenancy” which means many people accessing the same resources or data at the same time. Due to this, the operation costs are distributed over many paying customers, bringing the per-unit costs down, thereby allowing continuous growth in business without an additional overhead burden.

The model allows vendors to keep the software data of their clients on servers, thereby revenue can be charged for each transaction or event.

Revenue inflow from advertising

Looking at SaaS from an Indian customer’s perspective, most would prefer a free software with limited operations. Take any known anti-virus software, for example. They can be easily downloaded from the website, can identify worms and Trojan horses in minutes, quickly scan any external data entering the device. But what is the source of revenue for vendors? This is called as the “Freemium” structure, where the software is free but the advertisements displayed on the software window ensure steady revenue. So the SaaS model warrant earnings either through a paid premium model or through advertisements on freeware version.

Having to start SaaS model in India as a business, can bring a plethora of opportunities as increasing software data traffic is now dependent on cloud computing models and clients also prefer accessing services via the internet. Most software revenues are sourced through the Google AdSense allowing developers and SaaS providers to grow multifold. With the integration of artificial intelligence in Cloud Computing, clients will be highly dependent on SaaS vendors in the times to come. Although data integrity still remains a concern that needs to be addressed, with improvements in cloud security and enforcement of international cyber security law, trust amongst the clients will surely be built in the coming years.

Avani Mishra is a graduate in law from the National Law Institute University, Bhopal. She qualified the Company Secretary course with an All India Rank 1 and is a recipient of the President’s Gold Medal for her academic distinctions. She also holds a B.Com degree with a specialization in Corporate Affairs and Administration.