SaaS startups are expecting a decline in revenues as companies reduce their overall spending
While Saas startups face tough times ahead, there are newer channels of demand opening up
India’s software startups are seeing rising demand for collaboration and employee productivity tracking tools, as well as data protection services, as most corporate employees work from home amid the covid-19 pandemic.
However, Indian software-as-a-service (SaaS) startups are expecting a decline in revenues as companies reduce their overall spending even as some services, such as video conferencing provider Zoom and collaboration software Slack, witness a surge in users over the past few weeks.
Vertical SaaS companies that sell to speciality sectors such as hospitality, food and travel have been hit the most, said Girish Mathrubootham, founder and chief executive of India’s most valuable SaaS firm Freshworks. Horizontal startups, which cater to companies in diversified sectors, have seen a relatively lower drop in growth so far, he said.
Mathrubootham warned that this quarter will be worse for SaaS companies.
“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 current uncertainty," he added in an email.
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 usage of products that boost productivity and facilitate collaboration.
“During the current 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 chief technology officer of SaaS unicorn Druva. Druva is now offering 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.