Why SaaS is an industry you should look at if you are starting up today

A strong ecosystem of SaaS is building up in India today. Not only are existing companies growing at a phenomenal scale but upcoming startups are also perceiving SaaS as a potential option. Not to mention, the evident success of local SaaS startups like Freshdesk and Zoho has given an even stronger pull to new startups towards adopting the SaaS business model.

One prominent reason why Software-as-a-Service is a worthy business option is the increase in demand for software products in the market. Be it any form or level of business, the use of software is increasing manifolds. From email automation to call management to customer support systems, software has been adopted widely. Companies look forward to minimising manual intervention for operational tasks, which are time-consuming as well as prone to human-errors.

SaaS entered India over a decade ago. However, it initially catered only to the overseas clients. It was in past few years that Indian corporates realised the benefits of software in business functioning. Soon, companies with large teams went for software installation for their business operations. But with time, even startups began to realise the need for automation and ease in business functioning, which a software brings in.

It is a well-known fact how automation makes routine business operations easier and increases team productivity and efficiency. Considering this, increasing demand for software from upcoming businesses, SaaS does look like a profitable and capable business opportunity for budding entrepreneurs.

Another reason why startups should opt for a subscription-based revenue model i.e. SaaS is the constant cashflow assurance it gives to the business. Even at the constant rate of acquiring new customers, businesses can see an increase in their revenue with the recurring subscription from existing customers. This also infers the correlation of customer relationship and business revenue.

A well-delivered service will ensure a positive and long-term relationship with customers. Herein, software deployment to enhance customer experience is a well-realised fact. Businesses are adopting software to upgrade user experience, hence customer experience. Fine customer experience will lead to their repeated purchases and hence, recurring business.

Also, the renewal payment of existing customers helps businesses be assured of certain revenue and eliminates the sole dependency on business from new customers. Businesses like ecommerce, for instance, depend on acquiring new customers for an increase in their revenue. Even if it's about selling to existing customers, their marketing and sales pitch has to begin from square one.

SaaS gains an upper hand here as it is a subscription-based model. The recurring business of existing customers is much assured in this business model as compared to other types of businesses. In fact, it won’t be wrong to say that most of the revenue of a SaaS company actually encompasses recurring business from existing customers.

Another benefit of SaaS as a business model is the ease it has in its development and maintenance. Earlier, building a new software meant building the required technologies, server, and an infrastructural platform from scratch. Today, platforms like AWS, Google Cloud, Microsoft Azure have reduced the infrastructural development and maintenance cost for SaaS companies. Essentials like servers, storage, database and security management can be built by infrastructural service providers easily without hiring many developers.

Another important aspect here is the recent technological development of the country. The reason why India is the apt place for SaaS startups is the tech advancements and the increasing demand for the same. Also, the tech resources in India are more cost-effective than most other countries. This saves both cost and effort involved in product development for SaaS businesses.

There’s a belief that by 2025, India will become a SaaS hub of the world. The low cost involved, easy maintenance, adoption of digital payment gateways have not only made business functioning easy but also facilitated smooth trade across the globe. SaaS as a business model also has a lot of potentials when launching/selling in other countries, considering the demand in the international market and low cost involved in developing the product in India. It is seen as a much secure and scalable business option for upcoming entrepreneurs.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)