Building SaaS in India — Now is the Time

Kamini Shivalkar
8 min readSep 4, 2019
Image source: Mailguard

Recently, we’ve seen a lot of action in SaaS. In the first half of 2019, Slack and Zoom were high profile tech IPOs. Icertis became 4th SaaS company from India valued at $1B+ (the first three being Zoho, Freshworks, and Druva). It is an exciting time to build a SaaS startup in India. At Gemba Capital, SaaS is one of our focus areas. We believe SaaS startups ‘made in India’ can win in global markets.

SaaS is now not just restricted to old software systems being replaced by their cloud analogues, but we see new categories such as marketing analytics, collaboration and productivity making their mark.

Image source: Fastmetrics

SaaS is a subset of cloud computing. Cloud computing comprises of a host of services like PaaS — Platform as a service (Zoho) and IaaS — Infrastructure as a service (Amazon AWS) whereas simply put SaaS is an application hosted on cloud accessed over the internet for a monthly subscription. In 2018, global cloud spending is estimated to be $187B with India accounting for $2.5B. 90% of Fortune 500 companies are using some form of cloud computing. As the cloud market grows to SMBs, there will be a greater push for the adoption of SaaS.

Source: Nasscom 2019 report — Cloud, next wave of growth in India

Global SaaS is estimated to be $73B in 2018 and projected to reach $129B by 2022. In India, it is currently $1B and expected to be $3.4B by 2022. Over 70% of the revenue is coming from markets outside India, US being the highest contributor. In India, SaaS penetration is 4% of the software and services market indicating ample room for growth. Hans Tung, Managing Partner at GGV Capital (Investor in Bytedance, Slack) believes India will have more SaaS unicorns than China. Suresh Sambandam, Founder &CEO of OrangeScape is bullish on India’s SaaS potential to reach $1T in annual revenue. We echo these views and believe Indian SaaS startups will take a page out of global SaaS playbook and rewrite a new growth story.

Here’s why we feel it is the right time to invest in this space.

  1. India has skilled tech talent
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India has abundant and diverse tech talent comprising of developers, product managers, UI/UX engineers. Over 15k professionals are working in SaaS startups in Chennai. As of April 2018, India has 2.75 million software developers and some of them are upgrading their skillset in advanced technologies like AI, ML, and Robotics. Poster boy of Indian SaaS, Zoho is referred to as SaaS founder’s factory. It has spawned 22 ex-Zoho employees who are currently running their own SaaS ventures like Freshworks, Chargebee, Facilio, etc.

2. Cloud is winning the war with on-premise

Image source: Exputec

There is a clear shift in demand from on-premise software to SaaS. Almost zero capital expenditure upfront and a monthly recurring cost for SaaS is appealing to enterprises now. Faster deployment, quick on-boarding, over the cloud upgrades with enterprise-level security is making SaaS the preferred choice for most businesses.

3. Cost arbitrage- Indian SaaS products are priced at least 4x lower than their US and European counterparts. Annual compensation per developer in India is $25k vs $120K in the US.

4. Scaled startups are becoming early adopters of SaaS- Scaled startups understand the significance of speed of technology adoption in achieving scale and operational effectiveness. They want to focus on their core competency and don’t wish to deploy their core tech talent in developing all products in-house. Even Indian SMBs are slowly willing to adopt SaaS as they see merit in adoption and they also have to compete with their digital more tech-enabled counterparts.

5. Consumerisation of IT

Image source: Technofaq

Millennials work on smartphone and prefer simple convenient go-to apps in everything they do. Remote teams and the new working style do not suit old enterprise software, physical processes.

If something works in consumer it’ll make its way to B2B with a 3 year lag. Whatsapp-> Slack, Facetime-> Zoom

-Andrew Chen, a16z.

6. Thriving SaaS ecosystem- Aspiring entrepreneurs now have a strong ecosystem to build SaaS businesses. For eg. Upekkha, is a SaaS venture catalyst which helps entrepreneurs build value SaaS businesses in a capital-efficient way. Events like "SaaSBhoomi" is held every year in India where the best SaaSpreneurs mentor and offer insights on various aspects of running a SaaS startup to entrepreneurs.

Image source: Upekkha and SaaSBoomi

7. No dearth of smart capital — One of the oldest and renowned enterprise-focused VC firm in US, Emergence Capital with portfolio comprising of Salesforce and Zoom has recently led Series B round of US-India startup Vymo. Post stellar exit in consumer internet space with Flipkart (acquired by Walmart), Tiger Global is bullish on SaaS with over $90M invested in 4 Indian SaaS startups — Fyle, Facilio, Zenoti and Clevertap in 2019. Many of the established SaaS founders have become angel investors in young SaaS startups.

Some of the areas where we have seen a lot of action in SaaS over the last couple of years are:

  1. ACI SaaS- Automation, Collaboration and Intelligence –Increasing need for automation and collaboration is the tailwind making enterprises shift from System of Record to System of Workflows. For eg. Any legacy ERP is a system of record in which most data needs to be manually entered by users. (Gemba Capital portfolio) which automates accounts payable for enterprises has redesigned the entire user experience based on capturing data intelligently from workflows and integrated with all third-party apps. Business processes which are manual or offline and generating large data need ACI.
ACI — Automation, Collaboration and Intelligence

Initially, products will focus only on Automation and Collaboration, thus differentiation for such products lies in keeping the application flexible, simple with a diverse feature set. Intelligence layer on top of this will be a strong moat and would increase customer stickiness. However, generating real-time meaningful insights proactively from a large amount of data captured through automation and collaboration is not an easy problem to solve.

2. Unbundling to Rebundling- Enterprise software is coming back full circle from integrated products (ERP etc) to unbundling (SaaS) and now again to an intelligent integrated offering (ACI SaaS). SaaS startups started unbundling on-premise large ERP systems into business function-specific products with attractive UI/UX. Thus, we have Salesforce for CRM, Hubspot for marketing, etc. As more SaaS apps entered the workspace, it resulted in unstructured collaboration and difficult to build an intelligence layer across a medley of SaaS products. Thus, emerged the need for an integrated platform. The dominant player in the core category will capture adjacent categories as well and emerge as a full-stack integrated solutions provider to the customer.

3. Low code/No code- Low code/ No code platforms work best for non-tech businesses which have limited or no in-house tech teams. Software is flexible with simple UI/UX, drag and drop tools wherein users can create and modify workflows, write business rules, develop immersive content (AR/VR) and even develop supporting mobile apps.

Image source: Moveoapps

When we met Zestl(Gemba Capital portfolio), we liked how they could deploy customized complex workflows in 1–2 weeks for large enterprises with internally built no-code platform and automated bots. It takes ~6 months from development to deployment for an IT service company for a similar product. In our opinion, startups initially will focus on vertical play and can then move horizontally across sectors.

4. Vertical SaaS- Vertical SaaS startups are breaking the mould by offering tailor-made platform with specific industry focus across functions. Thus, they are capable of addressing gaps which horizontal products can fall short of. Veeva for Pharma sales reps has been chipping away at the dominance of horizontal CRM players.

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Large, fragmented market wherein individual participants cannot build tech unlocks vertical SaaS opportunity. For eg. lending works best if it is built on top of vertical SaaS and payments. AI can comb through massive transactional data which drives the underwriting engine and credit can be offered real-time as per business needs.


Image source: Reddit

Indian SaaS market is still in its early stage. With an excellent product and right distribution strategy, SaaS startups can scale and grow at an unprecedented pace. Unlike marketplace, SaaS is not a winner takes all market. Startups can identify niche untapped segments and dominate that space globally. A case in point is Digital Ocean. Cloud computing is extremely competitive space dominated by Amazon AWS and Microsoft Azure who are targeting large enterprises. Digital Ocean took a different route by offering low-cost cloud computing platform to developers. In enterprise CRM too, Freshworks ($100M ARR) made valiant move with its Failsforce campaign prowling Salesforce’s ($13B annual revenue) annual Dreamforce event in 2018. Indian SaaSpreneuers are more confident with their product offering, focusing on underserved SMB market in US, Europe and able to outcompete their peers by offering a low-cost alternative. Newer business models are emerging like IoT led SaaS, SaaS enabled marketplaces, SaaS enabled payments + lending platform. Overall it is an exciting time in India to build a SaaS business.

If you are an entrepreneur from India building SaaS, we would love to hear from you. Please feel free to reach out to us at


>> Google/Accel partner report 2016

>>Times of India- Silent SaaS revolution is brewing in Chennai

>> Inc42 Report 2019

>> The Week 2018- India has fast growing software developer base globally

>> Forbes 2019- Profits can wait as Freshworks targets a cloud market dominated by SaaS

>> SaaSy in Chennai- Economic times



Kamini Shivalkar

Investment Associate at Gemba Capital, Ex-BYJUs, Edu- NIT, JBIMS