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Indian SaaS Startups’ Playbook For Balancing Cost And Scale

The SaaS economy worldwide has experienced significant shifts in the past few years. From the bull run of 2021, this fast-maturing tech sector has careened into severe growth challenges and a pervasive global economic slowdown. Clearly, it is on the cusp of a sombre reality check and no longer thrives on the heedless optimism and the reckless investment dollars that used to keep the tech parties booming.

But what is particularly encouraging even now is the excellent resilience demonstrated by Indian SaaS businesses in spite of macro headwinds. They have outshone some of their Silicon Valley counterparts, paving new growth paths in the process.

The SaaS industry in India has witnessed a remarkable leap, securing the second spot globally in terms of size and maturity. Whether measured in total annual recurring revenue (ARR) of $12-13 Bn in 2022 or an investment of about $5 Bn in the same year, the progress of Indian SaaS businesses was stunning.

It is further estimated that in the next five years, Indian SaaS companies will collectively reach $35 Bn in ARR to capture around 8% of the global SaaS market.

To understand how Indian SaaS companies have built a strong muscle amid macroeconomic disruptions, Inc42 and Google Cloud hosted a roundtable titled Indian SaaS Startups’ Playbook For Balancing Cost And Scale. The session covered several critical topics such as:

  • The impact of the current macroeconomic headwinds on Indian SaaS businesses
  • Assessing Indian versus the global market response to the recent economic setback
  • How to approach emerging technologies like generative AI

The roundtable was moderated by Preeti Anand, director of business consulting at EY, who helps growth stage and enterprises with revenue increase, operational optimisation and innovation.

The session brought together notable attendees from the Indian SaaS industry, including startup founders and technology decision-makers. Among them were Iesh Dixit, cofounder & CEO of the end-to-end construction management SaaS platform Powerplay; Avra Banerjee, cofounder of AI-based SwitchOn that helps manufacturers detect and eliminate product faults; Soumitra Gosh, VP (engineering) at Entropik, an AI-powered integrated market research startup; Gaurav Gupta, cofounder of Shipway, a SaaS startup specialising in ecommerce workflow management, and Harshad Satam, the head of ISVs (independent software vendors) at Google Cloud India.

Decoding The Ripple Effect On The Indian SaaS Landscape

With the Indian startup ecosystem grappling with macroeconomic uncertainty, it is essential to analyse how the ‘shock’ factors impact the entire spectrum of organisational dynamics, including operational challenges, sales cycle, employee sentiment and more. More importantly, how will the terrible global turbulence affect customer behaviour, the cornerstone of business growth?

“The scaling up and expansion process are taking longer. Large deals have definitely slowed down. And all this is the outcome of the things happening around us. It’s a combined impact. Moreover, everyone is sceptical about large deals due to increasing capital and operational expenditures leading to longer sales cycles,” said Avra Banerjee of SwitchOn.

While a longer sales cycle directly impacts business decision-making, it is worth noting how the market, in general, is responding to headwinds. Sharing his view on how the economic slowdown affected the domestic market compared to the global landscape, Harshad Satam of Google Cloud India said that the Indian SaaS market did not witness any slowdown.

“India’s enterprise customers continue to invest, seeking scalable solutions for growth. However, SaaS companies targeting the North American market face challenges as customers there prioritise spending. The focus shifts to deciding between product development, customer retention and upsell-cross-sell opportunities from existing customers,” he explained.

To dive deep into the discussion for a close look at the SaaS realities in India and abroad, watch the roundtable on Indian SaaS Startups’ Playbook For Balancing Cost And Scale.