Industry Overview: SaaS market in India

The challenge as well as the opportunity for SaaS players in India is to continue educating the market about the benefits that SaaS can provide to its end users.

SaaS also has great potential and room to grow in India due to low penetration of software applications among Indian enterprises, especially the SMB segment.Some of the major challenges that SaaS providers face in India currently are lack of knowledge about Indian workflows, lack of IT support, etc.

However, despite some of these constraints, Zinnov believes that the market will grow exponentially if aspects like growing basic internet infrastructure, unique business model innovations, pricing and support innovations, etc. are addressed in a phased manner.

Telecom providers will indeed act as a very important cog in the wheel that will help drive this growth. It will primarily be a combination of both push from Saas players and a pull from CIOs in the market.

To succeed in the Indian market it is essential that SaaS firms look at the right price-value mix, followed by a solution centric approach.

Essential aspects that players need to address before looking to grow in the SaaS market in India consist of the following:

* Product Customization: Indian small businesses do not follow global best practices in business process, and hence global products without customization do not fit their needs.

* Sales & Marketing spend will be high: Globally sales and marketing spend is about 50% of the overall budget for key SaaS players. The need to create IT awareness through events, demos and a lot more off line modes than globally accepted online modes, will substantially increase the spend on S&M to acquire clients.

* Channel Partners are key: Partner eco-system focus is essential in India. With a wide business landscape that requires communicating with clients in at least 8 major languages if not 22, there is need for a strong local channel partner eco-system to scale effectively in the market.

* Telecom Players : Telecom players such as Airtel, Reliance, Idea and BSNL are essential in the eco-system. Not only do they lead SaaS adoption through increased broadband penetration but they can also act as effective partner for payments.

Karthik Ananth
Zinnov

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