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India Pegged to be Fastest SaaS Market in APAC, Says Springboard

By Dilip Thomas

Software as a Service (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. Springboard Research, a dynamic innovator in the IT Market Research industry, today released a study showing 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% to USD7 million in 2005, and the market is expected to grow to USD48 million by 2008, representing the fastest growth in the region.

"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 Research. "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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