Feature

India’s got ‘SaaS’

The software-as-a-service industry is set to be worth $144 billion by 2022, and India has a seat at the high table

Five years ago, a company scripted a remarkable turnaround. Its market cap had plummeted from $1 billion when it listed to $8 million following the 2001 crash, trading at less than a $1 per share. The company Concur, which had begun by selling applications on CDs and floppy disks, decided to dismantle its business model and try a whole new one called SaaS (software as a service). It was essentially a change in delivery. Instead of shipping across bubble-wrapped CDs, their updates and newer version of the business-expense-reports application could now be accessed by their clients online, like you would a shopping site, on a browser. It drove up their revenue to $600 million in little over a decade and then SAP bought it in 2014 for $8.3 billion to bolster its presence in cloud computing, an area it could no longer ignore. SAP’s CEO Bill McDermott had called it the best business case he had ever put forward to the board.

Around the time McDermott was building his friendship with Concur’s co-founder Steve Singh, perhaps warming him to the deal, Marc Andreessen of venture capital firm Andreessen Horowitz wrote an article titled “Why software is eating the world”. He attributed software’s gigantic leap in influence to SaaS, with more and more conglomerates running on software that was delivered easily, as an online service. Much like we watch movies now on Netflix, rather than walking down to the nearby video or CD rental.

With SaaS, companies no longer spent weeks or months installing complex software on desktops (remember the frustrated IT department staffer egging the workstations to update faster?). The SaaS provider, for a subscription fee, hosts the application at its data centre and customers access the software through a standard browser. The updates are done at its end too. This means zero capex, no hardware installations and ease of integration. Most leading SaaS companies publish their APIs (application programming interfaces) that help applications or platforms talk to one another effortlessly.

Little wonder then that there is an explosion of SaaS companies around the world, particularly in India. The global market is expected to grow from $80 billion in 2018 to $143.7 billion in 2022. It will nearly double over four years and, happily for us, India is perfectly placed to ride this wave. We have a large talent pool of software engineer

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