The Indian Software as a Service (SaaS) industry is set to register $100 billion in revenues by 2026, according to a joint report by venture capital firm Chiratae Ventures and consultancy firm Zinnov.

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Venture capital investments in the sector grew three-fold in 2021 to over $4 billion and it is expected to grow by 55 percent to touch $6.5 billion over the next year, the report titled “India SaaS - Punching Through the Global Pecking Order” added.

"2021 was a watershed year for Indian SaaS -- including exponential valuations, successful IPO debuts, a vast influx of VC (venture capital) investments, and an unprecedented number of unicorns," said Pari Natarajan, Chief Executive Officer of Zinnov.

"On the path of crossing the milestone of $100 billion in revenue by 2026, India is fast emerging as a clear leader in SaaS, and will supersede China to become the second-largest SaaS nation in the next few years," added Natarajan.

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As per the report, about 90 percent of all SaaS unicorns have achieved the status in the last four years and there are currently more than 1,150 active companies, with a cumulative revenue of $8 billion in 2021.

About 40 percent of the revenue is coming from the enterprise segment, making profitability a "realistic milestone for SaaS companies", it claimed.

Globally, India recently surpassed the United Kingdom in the number of SaaS unicorns and is gearing up to surpass China to become the second-largest SaaS nation by 2026, the report said.

"India is a global SaaS leader, and Chiratae Ventures has been fortunate to be at the center of this surging momentum, with over 35 SaaS companies in our portfolio like Uniphore, which recently raised $400 million, and others like Pixis, Hevo Data, Healthplix, CropIn, Pando, Deepfence, and Squadcast which are valued over $3.5 billion and last year overall raised $600 million," said Sudhir Sethi, Founder and Chairman of Chiratae Ventures.

The report has identified Cloud Security, Cloud-Native Enablers, Hyper Intelligent Automation, Web3, and Verticalized solutions as key areas of interest for investors in 2022 and beyond.

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