SaaS continues to gain traction in India

NEW DELHI, INDIA: Indian SaaS market to grow at a compound annual growth rate (CAGR) of 77 per cent from 2006 to 2010, to reach $165 million by 2010, according to the research on the Software as a Service (SaaS) market in India conducted by Springboard Research.

Springboard believes that a buoyant Indian economy, driven by rising domestic consumption and exports, expanding broadband infrastructure, and increased internet penetration among small and medium businesses (SMBs), will make India a significant market for SaaS applications. 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.

“The level of SaaS awareness in India continues to rise,” said Balaka Aggarwal, senior market analyst for Emerging Software at Springboard Research. “Our report showed that the more than anything else, ease of use and management is driving this trend toward SaaS, with 44 per cent of our survey respondents indicating that these were the key reasons they put SaaS in place, beating out lower cost of ownership at 23 per cent,” Aggarwal added.

The challenge -- and the opportunity for SaaS vendors is to continue educating the market about the benefits that SaaS can provide end users. About 26 per cent of Springboard’s survey respondents in India named “low awareness of the concept and benefits of SaaS” as the main reason preventing their adoption of software as a service. Combined with responses like “technology not mature” (22 per cent), “no business requirement” (16 per cent), and “finding a SaaS vendor difficult” (12 per cent), it is clear that increased education and awareness efforts can help vendors better market SaaS in India, Springboard said in a statement.

Springboard Research also found that while most SaaS applications are still purchased directly from the vendor, there is an emerging channel for SaaS in India appearing, especially for more complex SaaS applications focused on enterprise resource management (ERP), customer relationship management (CRM), and human resources (HR).

“End users in India definitely see a place for an SaaS channel, with the vast majority of our respondents saying that the channel is necessary or helpful when purchasing SaaS,” Aggarwal said. “Many end users also feel that the channel can help with implementation as well as to provide ongoing comfort through face-to-face interaction.”

The Springboard Research report, The Software as a Service Market in Asia Pacific, 2006 to 2009: Expanding the Reach & Appeal of Software, examines key trends in the Asia Pacific enterprise Software as a Service (SaaS) market, including in-depth coverage of India as a separate bulletin.