India to be fastest growing SaaS market in APAC

NEW DELHI: A study by Springboard Research showed strong growth in adoption

levels in India and across Asia for Software as a Service (SaaS) in 2005, and

even brighter prospects ahead.

India saw revenues increase over 53 per cent to $7 million in 2005, and the

market is expected to grow to $48 million by 2008, representing the fastest

growth in the region.

SaaS is an emerging software delivery model in which application software is

delivered remotely through a subscription-based fee rather than being sold for

perpetual use.

The users do not buy the license of the software, but only a right to use it.

SaaS is also referred to as On-Demand Software and On-Demand Application.

“The SaaS market is receiving considerable focus from software vendors

operating in various spheres of the industry,” noted Dane Anderson, research

vice president at Springboard.

“Global software giants, local ISVs and emerging on-demand software vendors

all have a healthy dose of respect for the power of SaaS to disrupt the

competitive frameworks of the software industry in the future.”

A survey of Indian Small and Medium-sized Businesses (SMBs) identified cost

benefits as the primary driver for SaaS adoption, but ease of use and business

benefits were also cited as important market accelerators.

Indian SMBs have the highest level of awareness of SaaS in Asia, however,

SaaS has not made much headway among them largely because of low penetration of

software application usage in this market segment. The mismatch between high

awareness and low SaaS penetration is also because most of the SaaS vendors are

not present in India and large traditional vendors dominate the Indian

enterprise application software market.

Web Conferencing and Collaboration currently represents the largest portion

(43%) of the total SaaS revenue in India. However, a number of other software

market sectors are now gearing up for a SaaS push. The segments in particular

that appear poised for strong SaaS advances over the next several years are ERP,

Supply Chain Management, and Human Resources applications.

Indian software vendors are also slowly entering the SaaS marketplace, but

North American vendors currently dominate the market with web conferencing and

collaboration vendor WebEx leading the Indian market.

"We believe that the current buoyancy in the Indian economy driven by

rising domestic consumption as well as exports, the growth of broadband

infrastructure and growing penetration of the Internet among SMBs will make

India a significant market for SaaS applications," said Ravi Shekhar Pandey,

senior market analyst at Springboard Research.

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