Covid-19 impact: Software startups see rise in demand but expect revenue decline
Vertical SaaS companies that sell to speciality sectors like hospitality, travel and food have been hit the mostHorizontal startups, which sell to companies in a wide range of sectors, have seen a relatively lower drop in growth so far
PremiumBENGALURU: India’s software startups are seeing a rise in demand for collaboration and employee productivity tracking tools as well as data protection services as most corporate employees are working from home amid the covid-19 lockdown.
Even as some services, including video conferencing provider Zoom and collaboration software Slack, have seen a huge increase in users over the past few weeks, Indian software or SaaS (software as a service) startups expect a decline in revenues as companies reduce overall spending.
Vertical SaaS companies that sell to speciality sectors like hospitality, travel, food and other sectors have been hit the most, said Girish Mathrubootham, founder and chief executive officer of India’s most valuable SaaS firm Freshworks. Horizontal startups, which sell to companies in a wide range of sectors, have seen a relatively lower drop in growth so far, he said.
Mathrubootham warned that this quarter will be worse for SaaS businesses.
"While SaaS businesses enjoy some advantages over other industries — they are delivered over the internet and maintained in the cloud, they are easier to deploy, manage and support — they are not immune from impact. SaaS businesses should expect to see both new and existing revenue affected in (the current quarter). As such, all companies should look to conserve cash and reassess their hiring needs and growth plans given the uncertainty around the current situation," he added, in an e-mail.
While SaaS startups face tough times ahead, there are newer channels of demand opening up.
Freshworks, for instance, is seeing increased demand for products that enable companies to serve their customers remotely like a chat and call routing services.
Another SaaS firm Zoho Corp has seen an increase in use of products that boost productivity and facilitate collaboration.
"During the recent virus outbreak, we have seen a spike in those products that specifically boost employee productivity and facilitate collaboration across remote locations," said Rajendran Dandapani, director of Technology at Zoho. "We even packaged them together into an easy to use Suite - Zoho Remotely - that we are offering for free until this virus threat passes away."
In the current situation, critical business data is at risk to potential security threats, according to Milind Borate, co-founder and CTO of SaaS unicorn Druva.
Druva now offers Microsoft Office 365 and endpoint data protection services free for six months to new customers.
"It is clear that malicious actors are trying to leverage this situation for their own gains...Teams need to ensure data remains protected from malicious actors, and we are working to support businesses of all sizes, including non-customers, to minimize exposure of business-critical data. This has resulted in a wide range of discussions with customers and prospects about how to combat this new business environment. We’re seeing a large number of them seeking additional support to protect their now largely mobile workforce and expedite cloud migrations," he added.
Neeraj Sharma, vice president - human resources of FourKites, a SaaS-based supply chain visibility solutions startup, said collaboration tools have reached "a new high in utilization worldwide".
"SaaS products have the inherent advantage of ease of adoption by being successfully deployable - training and getting the products to production mode can be done remotely and in a very short period of time," Sharma said. He added that a recent virtual summit the company hosted had 1,039 participants from across geographies and verticals.
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