AI accelerating India’s SaaS growth to beyond $50 billion in ARR by 2030: Report

India’s SaaS market is projected to surpass earlier estimates for annual recurring revenue (ARR) of $50 billion by 2030, with potential for upward revision due to rapid AI advancements and integration into SaaS solutions. According to Bessemer Venture Partners survey, 60% of start-ups, once pure SaaS companies, are now evolving into AI-enabled SaaS providers. India’s start-up ecosystem is set to attract $1 billion in new venture funding in 2024, a 25% increase from 2023 and a significant portion of this investment will target AI-focused companies, offering substantial growth opportunities.

Indian SaaS unicorns and centaurs have collectively added $5.9 billion in revenue in 2023 alone.

The report, titled “The Rise of SaaS in India 2024”, highlighted the burgeoning growth potential of the Indian SaaS industry, driven by the rapid adoption of AI, increasing focus on cybersecurity, and increasing cloud adoption in the BFSI and manufacturing industries.

Anant Vidur Puri, Partner, Bessemer Venture Partners, said: “2024 is the year AI goes mainstream, marking a pivotal shift from emerging technology to a cornerstone of business and industrial operations. AI is the next revolution in software, and we expect all software to transition to AI native, AI enabled, or AI infused in some way over the coming months. India is also in a unique position with its large base of AI developers and global leadership in business and professional services. We believe AI will be a big boost to this industry by enabling better margins and higher customer value delivery.”

The top 5 predictions from the report include:

AI-enabled software will emerge alongside SaaS as the lines between traditional SaaS and AI-enabled software are rapidly blurring

AI will grow India’s dominance in the professional services market

Cybersecurity is becoming increasingly central to India’s maturing tech landscape

Cloud software providers will power the next unlock in India’s wealth ecosystem

Industrial SaaS will transition from on-premise to cloud deployments

According to the report, despite the challenging market conditions with ongoing high interest rates, there has been the emergence of new SaaS unicorns this year, including Krutrim AI and Bessemer portfolio company Perfios. The past year has also seen the addition of three new Centaurs in India—Amagi, ShipRocket, and Innovacer—further solidifying India's position as a global SaaS hub.

The report recommends early-stage start-ups in the ecosystem to appropriately balance growth with profitability.