BENGALURU: The Evolution of Indian SaaS

The Indian Software-as-a-Service (SaaS) sector, once thriving on abundant capital and rapid expansion, is undergoing a significant transformation. With global IT budgets tightening and artificial intelligence (AI) disrupting traditional development cycles, startups are now compelled to streamline operations, rethink pricing strategies, and adopt more efficient product models to stay competitive.

The Shift Towards Automation and Efficiency

Manav Garg, Co-founder and managing partner at Together Fund, emphasizes the importance of adapting to this new era. "Agentic-first and API-first solutions are becoming the norm. Automation can now handle 30% to 70% of human tasks, a figure that's only set to increase," Garg explains. He also highlights how Indian companies have already reduced development costs by up to 30% through engineering automation, a move that avoids unnecessary hiring and cuts costs effectively.

AI's Role in SaaS Productivity and Cost Reduction

Jaspreet Singh, founder and CEO of Druva, notes the industry's shift towards consumption-based models, which offer better agility and alignment with business goals. Druva's adoption of such a model has not only resonated with customers but also helped the company gain market share amidst competitors still reliant on hardware sales. Singh also discusses the integration of AI tools like Cursor and Claude in coding processes, acknowledging the ease they bring to writing code while cautioning about the need for careful balance in integration, security, and governance aspects.

Consolidation and the Future of SaaS

Shobhit Jain of Avendus Capital and Arun Chandrasekaran of Gartner both foresee a future where AI-driven services consolidate the SaaS space, replacing niche solutions and streamlining tech stacks for large enterprises. Chandrasekaran also points out the necessity for SaaS startups to embed AI within their applications responsibly, ensuring customer data privacy and addressing new requirements around data sovereignty.

As the cost of capital rises and enterprise clients demand more flexible pricing and AI integration, SaaS startups are under increasing pressure to deliver both efficiency and innovation. This era of disruption in SaaS is creating new winners and losers, with the landscape set to be redrawn by those who can best adapt to these changing dynamics.