Of the 82 Indian SaaS companies that received investments this year, almost one third of them have been funded by global investors, according to information provided by data-tracking companies Xeler8 and Tracxn. SaaS works on a software distribution model where third party providers host applications that are made available to customers over the internet.
While the likes of Infosys bagged global clients and brought outsourced software development into the country, SaaS companies of Indian entrepreneurs are selling software as-a-service in the global market using capital raised by global investors. Most of these SaaS startups are headquartered in their target market, generally based out of the US, with a small marketing team.
Their product development team and a majority of their marketing and sales teams work out of India. Helpshift, a San Francisco-headquartered mobile CRM provider backed by Microsoft Ventures and Salesforce Ventures, for example, has 75% of its workforce operating out of its development centre in Pune.
“It is easier to find and retain talent in India, leading to a huge cost benefit,” said Baishampayan Ghose, Chief Technology Officer at Helpshift.
Sharad Sharma, Angel Investor & Co-Founder of software products industry think tank iSPIRT, said the US SaaS market is divided into “BMW”, “Toyota” and “Chevy” segments.
Indian SaaS companies are doing well in the Toyota and Chevy segments because there is a competitive advantage in marketing and selling across global markets from India, he said. “A SaaS company doing desk marketing and selling from Chennai gets more traction for the same budget than the one in San Francisco,” Sharma said. He said foreign investments in Indian SaaS startups indicate that India has the potential to emerge as the hub for SaaS startups in the world.
Data from Tracxn indicates that Accel Partners, Google Capital, Sequoia Capital, Blume Ventures and 500 Startups are the most active venture capitalist funds in Indian SaaS space. Silicon Valley-based Storm Ventures also announced a $10-million fund specifically for Indian SaaS startups.
Source: Economic Times