How Generative AI Is Changing the Face of SaaS A recent report by SaaSBoomi in partnership with McKinsey says that Indian SaaS companies stand poised to embrace the wave of Generative AI by building world-class AI-powered products
By S Shanthi
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Generative AI (artificial intelligence) presents a huge opportunity for India's Software-as-a-Service (SaaS) companies today. Globally, 60+ high-impact domains across horizontal, vertical and developer SaaS tools are emerging along with rapid adoption of AI to drive 15-40% higher internal productivity, says a report recently released by a pay-it-forward community of 3000+ founders, SaaSBoomi, with McKinsey & Company as the knowledge partner.
It also talks about how Indian SaaS companies stand poised to embrace this wave of Generative AI by building world-class AI-powered products leveraging the depth of domain and functional expertise available in India. Titled 'India's SaaS Revolution: Exploring global opportunities in a dynamic market', it offers in-depth insights into how shifting macroeconomic trends and transformative technologies like Generative AI are creating an environment of opportunity for SaaS companies.
"As Generative AI revolutionizes the SaaS landscape, entry into the market has become more accessible. However, for enduring value creation, the establishment of sustainable competitive moats is crucial. With the democratization of tooling, it's imperative for founders to build defensible moats via network effects, leveraging proprietary data, or having deep workflow integration to stand distinct in this transformative era." said Manav Garg, co-founder, Eka and Governing Council Member, SaaSBoomi.
Global Vs India Scenario
The global Generative AI market size was valued at USD 8.2 Billion in 2021, and is projected to reach USD 126.5 Billion by 2031, growing at a CAGR of 32% from 2022 to 2031. In India, investors are also riding the wave. According to Venture Intelligence's data, the share of VC investments in AI startups stands at 15 per cent of the total VC funding in the first five months of 2023 (January-May) compared to a corresponding 10 per cent share commanded by AI startups in 2022.
"The global SaaS market is experiencing significant growth, with India emerging as a key player. The disruptions shaping the market present opportunities for SaaS companies to innovate and leverage India's structural advantage. The sheer rise in founders building applications in over 60+ Gen AI SaaS domains signals a compelling shift towards a SaaS.AI era. Harnessing India's talent and technological depth supported by a thriving ecosystem of investors, industry associations, corporates, and policymakers could prove pivotal in its journey to be at the forefront of global SaaS innovation" said Noshir Kaka, Senior Partner, McKinsey & Company.
Tapping into this market are India's leading SaaS companies, who are following the footsteps of global software giants like SAP, Salesforce, and IBM and investing in Generative AI like never before. For instance, over the years, the Sridhar Vembu-founded company has incorporated a few generative AI use cases across its apps as well. However, most of them in use are outside the medium-sized models' category - including but not limited to translation, grammar error correction/detection, Natural Language Q&A in BI tool, etc.
"We have also identified cases in our broad product suite utilizing Generative AI. For instance, to not only help sell better using Zoho CRM but also resolve customer support faster by collating and gathering information from the knowledge base, past interactions, transcribing our meetings and generating actionable insights etc," said Ramprakash Ramamoorthy, director - AI Research, Zoho Corp.
This year, Zoho's competitor Freshworks has also unveiled Freddy Self-Service, Freddy Copilot and Freddy Insights to make AI more accessible to every workplace. The new predictive and assistive generative AI capabilities embedded within Freshworks solutions and platform are said to go beyond content generation and help support agents, sellers, marketers, IT teams and leaders become more efficient with a revolutionary new way to interact with their business software.
"We have been helping customers run more efficient businesses with AI for half a decade and know they don't need a billion apps to do so. Every department could benefit from a workplace assistant that maximizes productivity, and that's what Freddy AI can do – for the support agent, salesperson, marketer, IT manager, HR professional, developer and more," Girish Mathrubootham, founder and CEO, had said in a statement.
With the rise of Generative AI, the SaaS industry is likely to witness tremendous growth. However, as mentioned in the report, the ambitious vision requires a collaborative effort from industry associations, government, investors, and corporations.
