Generative AI will Help Build $100 Million SaaS Businesses in India
“In the next decade, we will see several $100m software businesses built from India for India. They will follow an entirely different playbook to US SaaS startups,” said Haptik AI founder Aakrit Vaish, adding that an entire industry is waiting to be disrupted. Salesforce’s shares recently plummeted by as much as 17% after the cloud software vendor reported weaker-than-expected revenues. However, Zoho founder Sridhar Vembu remained unaffected and recently took a dig at Salesforce for its disappointing quarterly numbers. Zoho continues to thrive, having not faced any layoffs and claiming zero debt on its balance sheet. AIaaS is the New Saas It would be naive to declare SaaS dead. Rather, existing SaaS companies are evolving into AI-first entities. “Legacy and new SaaS companies will truly become AI-first (not just marketing), abstract away the complexity of deploying LLMs,” said Matt Turck, VC at First Mark Cap, adding that AIaaS becomes the new SaaS. https://twitter.com/rajeshsawhney/status/1794563707558838300 Indian SaaS companies such as Zoho, Freshworks, CleverTap, and Atlassian have added generative AI capabilities to their existing solutions. Meanwhile, numerous AI startups are developing new products based on these generative AI technologies. According to AIM, approximately 60 AI startups in India are building products using generative AI. Every AI startup that is not engaged in core research effectively becomes a SaaS company, or what we might call AIaaS. For instance, several companies are developing AI-powered conversational platforms for customer care, such as Exotel, Freshworks, Gupshup, Corover.ai, Limechat and Yellow.ai. Thiyagarajan Maruthavanan from Upekkha thinks that SaaS is not dead; instead, enterprise CMOs are overwhelmed by too many options. “Some people are selling more tools, such as GenAI tools, to solve their ‘too many tools’ problem. More sensible folks are going to their service partners, like Accenture and TCS, and asking how to use these GenAI tools to achieve the outcomes they were missing while the tools proliferated,” he said. India’s SaaS ecosystem has skyrocketed, with startups growing from 471 in 2016 to over 26,000 in 2022. Eleven Indian SaaS companies have surpassed $100 million in annual recurring revenue (ARR). This elite group includes pioneers such as Zoho, Druva, Icertis, and Freshworks, alongside emerging leaders like Innovaccer, Zenoti, and Postman. According to a recent report, the Indian SaaS industry is projected to reach $50 billion by 2030, with companies and unicorns generating $20-$25 billion in revenues by that time. SaaS x GenAI Zoho currently offers Zia, its generative AI assistant powered by OpenAI’s GPT-4, which helps generate business emails and social media posts, answer tickets, and generate minutes of the meetings. Freshworks reported that its GenAI platform, Freddy Copilot, has saved a B2C enterprise retail customer over $94,000 in the first year of implementation, resulting in a 187% return on investment. Similarly, Yellow.ai has already seen 10% of its enterprise customers choose GenAI-powered customer support, with response times reduced to 0.6 seconds. Another Indian startup LeadSquared is using LLMs provided by AWS Bedrock with customer-specific data to improve the quality of the chatbot responses and streamline the onboarding process. Meanwhile, Clevertap recently unveiled Clever.AI, designed to enhance customer engagement and retention. It can forecast precise business outcomes using data from CleverTap’s proprietary TesseractDB™, ensuring granular data and extended lookback periods for accurate predictions. Many other SaaS startups, such as ChargeBee, Druva, and Postman, are also integrating GenAI solutions. Non-Indian SaaS startups are also performing well. In an exclusive interview with AIM, Zendesk said that it plans to reach $3 billion by 2027. The company leverages Amazon Bedrock to scale generative AI applications, incorporating Anthropic’s leading model, Claude 3. Recently, Adobe’s stock jumped nearly 15% in after-hours trading, fueled by strong demand for its AI products and impressive earnings. “Adobe delivered a beat-beat-raise, and the market felt good about it, jumping almost 15% after hours,” said Daniel Newman, the CEO of TheFuturumGroup. He added that software, and in many cases SaaS specifically, will be one of the most important consumption layers for AI. “Much like how AI on iPhones will be a big growth driver for Apple, SaaS companies like Adobe will drive significant AI adoption and incremental growth by making AI easily accessible and consumable within their existing apps and captive user base,” he said.
Indian SaaS startups are betting big on generative AI to improve their products and services.
Indian SaaS startups are betting big on generative AI to improve their products and services.
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["AI", "ML", "generative AI", "GenAI", "OpenAI", "Anthropic", "Aim", "RAG", "AWS", "R"]
Siddharth is a media graduate who loves to explore tech through journalism and putting forward ideas worth pondering about in the era of artificial intelligence.