The global economy has seen many ups and downs recently. This uncertainty has impacted how business decisions are made, especially in case of IT spending. According to a survey conducted by NASSCOM, the geographic shift of business and increasing need to find newer customer base has led large Independent Software Vendors (ISVs) to offer SaaS based services. NASSCOM estimates that IT spending growth was highest in Middle East & Africa, followed by Asia Pacific and South America.

A recent bulletin by Springboard believes that the Indian SaaS Market will be $352 Million by 2012. Familiarity with SaaS, reduced IT expenses upfront, need for automation has jump started the growth for SaaS applications in India. The alternative delivery and business model has also attracted Indian ISVs who are increasingly catering to world markets.

Today the Indian domestic market has never been so lucrative and companies are trying to address this need. According to NASSCOM - Zinnov study, SaaS market in India is driven by small and medium size business.

This growth was fuelled with adoption of SaaS based services within IT and ITeS markets. Easily available infrastructure, internet access and greater dependency in IT were the reason. This was very ably complimented by telecommunication companies looking to expand business and provide value added services. But slowly, manufacturing and other old economy companies are adopting IT and SaaS based services with its low entry cost is making in-roads there as well.

Three magic bullets fuelling the growth of SaaS market in India are:
• Low entry cost, manageable OPEX
• Increased buying capacity due to appreciating Rupee
• Acceptance of on-demand services and rapid advancement of technology and enabling services

The domain experience of Indian Subject Matter Experts (SMEs), gained from the services business, and SaaS based solutions are enabling IP led services in niche verticals. Services being the backbone of Indian IT industry, there is plenty of domain knowledge available within India waiting to be exploited. India is fast emerging as a new destination for skilled workforce and this only adds to India's advantages.

Will the SaaS be next wave in Indian IT industry? Only time can tell...

Rajesh Ranjan is Program Director in MindTree's Software Product Engineering Business Unit. Ranjan (as he is known) is currently working as Product Manager in the Business Application Product Industry Group. He has more than 17 years of experience in IT. He can be reached at rajesh_ranjan@mindtree.com.