New trends in SaaS, and how Indian startups are grabbing those opportunities

Photo credit: Pixabay.

(This article was co-authored with Prasanna Krishnamoorthy and is part of a series of articles on the emerging SaaS story in India.)

In the first part of the series, we took a case study to show the inherent advantages that an Indian SaaS startup typically has over its counterparts around the world.

In the second part, we derived insights from a Signal Hill-iSPIRT survey of SaaS startups to see how emerging players in this space can make the most of those Indian advantages. Today, in the third part, we look at new trends and opportunities that India’s new wave of SaaS startups can capitalize on. But first, let’s look at the genesis of what’s happening today.

Flashback to 1990. India as a whole had about 200 IT companies clocking US$100 million in revenue collectively. If someone had dared to bet that a single company would hit US$1 billion revenue 14 years later, they would have been laughed out of the room.

To grow beyond US$10 million, an IT company needed to start making bigger deals with Fortune 500 companies. Deals ranging from US$10 million to 50 million, to even 100 million.

Back in the early nineties, it looked like you needed magic to land those deals, or relationships spanning years. Perhaps only the likes of IBM or EDS had the magic and the rolodex to land those kinds of contracts. How would upstarts from India even service such large projects, when the customer was in the US and the IT company in Bangalore?

The Indian IT industry grew 120-fold in 14 years to hit US$12 billion by 2004.

Fast-forward a few years to 1998 and the emergence of the Y2K scare, anticipating the humongous problems computers and software would run into with dates beyond ’99 in the new millennium. Suddenly, suit-clad Indian IT sales folks were winning big deals to fix this bug in software and data – not yet at the US$100 million milestone but Indian IT was on a roll to get there.

By 2004, landing a multi-year US$100 million contract was a done deal with the newfound respect Indian IT had earned. And TCS was the first to reach an annual revenue of US$1 billion. The Indian IT industry as a whole was at US$12 billion – a 120-fold rise in 14 years.

How was the magic captured? How were those projects delivered remotely? How was quality assured? How were the tens of thousands of developers hired and trained and deployed?

A few good skills

As Indian IT companies found out, it wasn’t really magic. There were a few key skills that Indian businessmen needed to learn to win these large contracts, and get to a US$1 billion revenue. And if there’s one thing that Hyderabad and Kota have proved, it’s that India is really, really good at replicating skills at scale.

The best people who learned these skills hopped across IT companies, bringing their learnings with them. Industry body NASSCOM helped form a community of professionals who learned from each other. And boom, a skill that was so rare it seemed like magic, was suddenly in the hands of a thousand more people.

The IT war was won purely on cost arbitrage, and we see the end stages of that battle playing out.

Tail of the cost arbitrage battle

15 years to create a new $2b market

The human touch