India’s SaaS (Software-as-a-Service) industry is on the brink of a remarkable transformation. Number of active internet users in the country is set to cross 900 million by 2025. The potential is enormous and the market is expected to grow from $14 billion today to more than $70 billion by 2030.
Horizontal SaaS has been the backbone of India’s SaaS growth for years and companies like Zoho have built versatile tools to cater to a wide range of industries. The solutions from customer relationship management (CRM) to project management platforms have gained popularity as these address common business needs across sectors. The approach has driven significant investment equipped with nearly 73% of SaaS funding since 2014 flowing into horizontal SaaS companies.
Vertical SaaS or software designed for specific industries is now gaining ground. Companies in the segment focus on addressing niche challenges like Chargebee helps subscription-based businesses manage revenue and Perfios serves the banking sectors with tailored software solutions. Funding has lately grown rapidly in the segment and has outpaced that of horizontal SaaS.
The shift is fueled by integration of artificial intelligence (AI) and generative AI (GenAI). AI is transforming business operations and enabling SaaS platforms to offer smarter workflows. AI integration has been a game-changer and allows the companies to create deeply customized solutions for industries like healthcare, finance and agritech. Investors are increasingly drawn to such specialized platforms.
The sector has challenges and the ongoing funding slowdown has impacted SaaS startups. Investments have dropped significantly over the past two years. Many horizontal SaaS companies have struggled without clear strategies for global expansion or strong product-led growth. Vertical SaaS platforms are emerging as more resilient and attractive options for investors.
India’s SaaS story is evolving equipped with vertical SaaS and AI-driven innovation leading the way.
