Talent management, tech transformation key challenges for Indian B2B SaaS: EY

Indian B2B SaaS industry continues to have a bullish outlook for 2023 despite global headwinds.

Indian B2B SaaS is targeting a positive growth for 2023 despite some weakening macro-economic trends. Yet, they are dealing with issues such as slow client closure cycles, ineffective sales practices, and difficulty in finding and retaining top talent, all of which are holding back their growth, according to a recent survey report titled Bellwethers of Indian SaaS unveiled by EY and Upekkha Value SaaS Accelerator. The report reveals that Indian B2B SaaS industry continues to have a bullish outlook for 2023 despite global headwinds. It states that Indian SaaS growth is highly capital-efficient by default across stages and remains largely unmoved by recessionary trends of the past year.

The report highlights that with expected economic recovery in H2’2023 and availability of dry powder within the SaaS focused Indian VCs/PEs ecosystem, funding activity is expected to gain traction. This presents an opportunity for Indian SaaS companies with demonstrated profitability to raise capital at favourable terms and double down on growth. The survey's results also show that as businesses grow larger, they are switching from sales-centric growth to product-centric growth. Growth that is capital efficient is, nevertheless, being hampered by certain challenges. Delay in the client closing cycle and sales inefficiency are two of the biggest problems. Given the current macro environment, the majority of respondents emphasised sales transformation as a crucial difficulty in this situation.

The report also explores the current state of Indian B2B SaaS through the lens of performance metrics, growth strategies and challenges impacting businesses.


Top strategic priorities, challenges and shifts for India B2B SaaS

60% of company CXOs reported product innovation, pricing changes and partner-led expansion as their top strategic priorities. Top challenge inhibiting growth was ‘delay in customer closure cycle’ for 51% CXOs, whereas and sales inefficiency came next for 41%+ CXOs. 

Hiring and retention continue to be a key challenge, but CXOs also emphasised on adopting reskilling and training strategies to mitigate the talent shortage risk. Alternative funding instruments, such as convertible notes, were emphasized against the backdrop of access to equity funding due to rising inflation rates. 

The report further identifies that 1 out of 3 Indian SaaS companies are Trailblazers with very low burn multiple (less than 1x) and ultra or hyper growth targets (greater than 50% ARR growth target). Trailblazers adopt deep focus on product innovation to win niche market opportunities and rely on low-cost customer acquisition process. 


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