Imagine you’re pitching your cyber security software to a large Indian bank. You’ve prepared a detailed ROI analysis, cost-saving calculations, and competitive landscape.
But the CIO barely glances at it. Instead, she asks about your educational background, why you started the company, your recent Forbes article on security incidents, and if you’ll personally be available when something blows up.
Welcome to Indian SaaS.
Building a SaaS business in India isn’t about adapting the Silicon Valley playbook; it’s about writing a new one. The Indian SaaS landscape is demanding, from navigating the complex buying process to building a capable sales team. As Bharat Kumar (CTO of Periskope) mentioned in my tweet about building a SaaS business in India — It’s like playing on the hard mode. And they are correct.
But for those who can master the playbook, the rewards are immense.
This article is the second in our series on building a SaaS business in India. (Check the footnotes for our first article on selling SaaS in India).
I spoke to Aakrit Vaish, founder and CEO of Haptik, India’s leading chatbot SaaS, which Reliance Jio acquired in 2019. Aakrit has built Haptik into one of India’s largest SaaS companies while selling primarily to Indian enterprises.
Whether you’re a startup founder or a global player eyeing the subcontinent, get ready for a masterclass on the art of building a SaaS ‘dhandha’ in India. Here’s what we’ll unpack:
- Does it even make sense to sell SaaS in India
- Finding buying intent with Indian enterprise customers
- The importance of founder-led sales
- Shortening long sales cycles
- Managing the painful collections process
- Building an org for the long-term
Let’s dive into Aakrit’s insights and explore how to build a thriving SaaS business in India’s dynamic and demanding market.
The Indian SaaS Market: Myths and Realities
Does it make sense to sell SaaS in India?
A key concern about the Indian software market is its size and potential to house many multi-million dollar companies. Depending on who you ask, the answer ranges from ‘no way’ to ‘looks difficult.’
Despite reports on the rapid rise of the Indian SaaS market, there’s no accurate measure of its size, as most Indian SaaS companies sell globally, and with most of them being private, one can only guess the India vs. global sales break-up. However, some facts support a growing Indian SaaS market.
First, meet India’s largest SaaS company — Salesforce.
Salesforce, the world’s largest CRM SaaS, made $730M in FY2023 in India, growing YOY by 50%.
Moving to the database layer, MongoDB, the largest global NoSQL database company, is expected to reach $50M from its Indian operations by FY2024, with over 50% YOY growth. In the last ten years in India, MongoDB has had a 70%+ CAGR.
At the infra layer, AWS is the top cloud seller in India, earning an estimated $1.5B in FY 2023, growing at 43% YOY.
Aakrit suggests it’s now possible to build a Rs 1000Cr SaaS company selling primarily in India and near India markets like the Middle East and South East Asia, compared to 3 – 4 years ago when most companies capped out at Rs 100 to 200Cr.
What’s changed?
Aakrit says, “In any market, the software sector’s growth lags behind consumertech and consumer goods by 3 to 5 years. First, the end consumer market becomes large enough for consumer companies to scale, and then software becomes important for these companies. After the consumer tech explosion created by Jio, UPI, and COVID-19 in the last 3 to 5 years, enterprises need more software than ever to manage their business, and this will only grow.”
But you can’t tap into this potential by following the US sales SaaS playbook.
Why the US Playbook Doesn’t Work
Early-stage Indian founders often face frustrations in replicating US market GTM playbooks in India. Aakrit highlights that the US playbooks don’t work because of fundamental market differences.
As an emerging economy, our software buyers aren’t leading the curve. They often look at the US and other developed nations to see what new software they use and take cues from it.
This shifts the buying process from does this product category makes sense for us to is this person/company selling the product good for us. Aakrit explains with an example:
Aakrit: “Let’s take my category, chatbots. By the time we went to the market, numerous US companies were selling chatbots. Verizon and Walmart had chatbots. So my customers didn’t ask if chatbots would work or if they are useful. They knew it was useful, they saw it in the US. So it was about why Haptik. It came down to the company’s pedigree, financial stability, reliability of our IT systems, and responsiveness of the founder.”
Secondly, Indian companies don’t think of ROI conventionally. A big PR announcement like “X company launches the world’s first WhatsApp chatbot” can raise their stock price, which companies consider ROI. It’s tough to model these ROI considerations.
Lastly, Aakrit reveals from personal experience that Indian buyers have a higher risk appetite, which may sound counter-intuitive.
“As a growing economy, people are keen to innovate. When you meet a CIO, they’ll say ‘I want to do this, I want to do that, I want to shake things up.’ If it’s a success, the CIO can say, ‘Look, I made this startup successful.’ That’s a big thing for them.”
“You need to invest time co-creating a solution with customers in a high-touch environment instead of just running ROI numbers on Excel. I rarely create business cases or ROI documents for large Indian enterprise customers. You need to prove you’re bringing something innovative and game-changing for them. That’s a big difference between Western and Indian software buying.”
Given these complexities, the biggest challenge for an early-stage SaaS founder is finding the buying intent in an Indian enterprise.
Finding Buying Intent — Make or Break for your business
One of the most confusing things for early-stage SaaS founders in India is if an enterprise has the budget for their software. In most cases, even if a ‘new software purchase’ line item exists in the annual budget of the enterprise, its contents are nebulous.
In the US, SaaS sellers identify the right line item for their software in the buyer’s budget (Remember BANT, the first point is Budget) to find buying intent, while in India, SaaS sellers have to find it through other means.
Aakrit: “The US buying cycle follows budgets. Every person from the CIO to the IT admin gets a budget. They say ‘here’s a million dollars for software.’ They create an annual plan for the budget plan. For instance, ‘I’ll buy these 4 software this year.’ They go to events, conferences, and meet software sellers. Very programmatic, logical, and structured.”
In India, it’s rare to meet a CIO or VP who allocates a fixed budget line item for your software. They won’t say, “We have budget for this initiative this year and we’re willing to spend $xM,” Ankit explains.
“Suppose the board approves a $5 million budget for new software this year. It doesn’t provide a breakdown of what those software are. It means every executive evaluating software asks their boss for approval, who asks theirs, who asks the CFO. The CFO checks if it’s within the $5 million budget and approves. All approvals are centralized.”
This creates an opportunity for an early-stage SaaS company to create a demand for their product. However, you first need to understand your customer’s buying intent.
Hustle to find buying intent
Finding buying intent in the Indian SaaS market blends traditional business practices with modern sales strategies.
Aakrit emphasizes returning to basics for founders to get a foot in the door: Hustle and build relationships.
“Think like old-school businessmen — How do they get a meeting with the client? First find a mutual connection who can introduce you. If not, locate the buyer at the company, chase them at industry conferences, and hustle for 5 minutes of their time. You may need to sit outside their offices or pitch your software in an elevator. Be ready to seize the opportunity.”
“Once you’re in, build relationships, tease out their problems, figure out the direction the company is going, present your product as the solution, and create urgency. Create FOMO or fear that this is a high-priority item because budgets are always available and not available.”
You can even hack your way through by talking to your prospect’s current sellers.
“It’s easy to find the vendors enterprises use. Talk to them and ask these 4 – 5 questions: Who’s the buying authority and how does decision-making happen? Second, do they pay? What’s the collection cycle?”
Meeting buyers face-to-face is the best marketing channel in India.
“Invest in events and conferences. Start by attending a few, then get a speaker slot, and then a booth or sponsorship. It’s important for buyers to see your brand at large events, your thought leadership, and meet you in person.”
What about digital marketing? In India, decision-makers rely heavily on personal networks, recommendations, and industry reputation for solutions. Cracking this through digital marketing is tough.
Performance marketing, especially Google, does not work, says Aakrit. An enterprise buyer won’t search for a chatbot vendor on Google. They’ll call three CIOs, who he knows have deployed chatbots. He is going to post on WhatsApp groups with industry peers.
Finding Buying Centers
Finding a company willing to buy your software is just half the battle. The other half is finding the right buying center in Indian enterprises. Aakrit says it’s more about understanding people than titles.
“Buying center comes from talking to other vendors, that’s the best way to discover, because titles don’t matter. Someone might be a CIO, CDO or CSO. You have to figure out who has influence to approve or stop your deal.”
You won’t find this information on LinkedIn. You have to get out of your office to find them.
He suggests a straightforward approach to gather insights: build relationships with mid-management executives.
“Meet them for informal conversations. They’ll enjoy hanging out with founders and exchanging ideas. You’ll understand the company dynamics, which is a high ROI on your time. You’ll know everything — who’s in charge, the software they’re considering, the budget, etc. Then, this guy becomes your champion and starts helping you.”
The Importance of Founder-led Sales in India
In Indian SaaS, founders’ roles extend beyond product development and strategic planning, even in a scaled-out org. First and foremost, they remain the biggest salesperson for their company.
Customer Obsession over Product Obsession
Aakrit: “They are taking a bet on your unproven software. The ability to call you for a quick issue resolution is hugely comforting. It is in fact more important than if your competitor’s product has more features. That’s a big part of your job, which is why I keep saying in India you need to be a customer-obsessed founder versus a product-obsessed one.”
Aakrit emphasizes the non-negotiable nature of this customer-centric approach in India.
Aakrit: “As a founder, if you think I only want to code and not meet customers or go in front of them, you shouldn’t run a SaaS business in India. There’s no way to do business like that here, and you’ll get frustrated.”
Founder as the Salesperson at Scale
As SaaS companies grow, founders tend to step back from direct sales and focus on product/strategy. However, in the Indian SaaS landscape, the founder’s continued involvement in customer-facing activities isn’t just beneficial — it’s crucial for sustained success and growth.
Aakrit cites Marc Benioff, founder and CEO of Salesforce. “Benioff famously said in an earnings call that he still spends close to a third of his time customer-facing, either selling or doing customer service.”
As an interesting aside, I want to share a quote from a SaaStr video by Jason Lemkin: “Mark Benioff goes to Davos, to the WEF event and sits at the top of a staircase all day to meet customers. Salesforce is too big for him to meet all of them. So he goes where the VIPs are and has a spot. He’s been going for ten years and just stands at the staircase to say hi to his customers.”
Even global SaaS giants recognize the value of founder-customer interaction, but the Indian market demands an even greater commitment. Aakrit suggests that in India, founders should spend two-thirds of their time with customers, even if they’ve built a 100 crore+ company. The ROI on this time is disproportionate, and nobody talks about it.
Importance of Founder’s Personal Brand
In India, the founder’s reputation and expertise unlock new business opportunities. Aakrit shares his experience leveraging this aspect:
“In India, personal brand matters a lot for founders because it excites people to discuss about their industry with someone knowledgeable. I spent a lot of time cultivating my personal brand in the chatbot AI space. Tata Docomo, our first customer, approached me after seeing a LinkedIn post, liked my background, and called to do something together.”
By positioning themselves as experts, founders can create long-term business opportunities. Instead of constantly selling to an executive, they can become an executive’s sparring partner, which has tremendous ROI.
First, consistently produce high-quality content. Don’t wait for your product to launch; start before day 1. Be active on Twitter and LinkedIn to share your articles or industry views. Reach out to journalists in your sector and offer quotes for stories to get into reputable publications like ET, Mint, and Forbes.
Accelerating the Sales Process
In India, where relationships often outweigh features and pricing, and budgets are not cast in stone, sales cycles are lengthy.
Nudging prospects to sign up
The universal sales tactic of educating prospects about recent wins and the value you’re creating for customers to create FOMO (Fear Of Missing Out) often works.
Aakrit: “Offer prospects examples and case studies of successful customers, even outside their industry. In the early days, this will be harder, so there might be a cold-start problem. But once you have a few customers, keep sending updates to your prospects — this month this customer did this, ensuring they notice something new/innovative happening and they may get left behind.”
Another challenge is to nudge fence-sitting prospects to sign the dotted line. You’ve done the hard work of showing them proof of value, offered pricing, and great terms, but some may still take time to close the deal. Aakrit suggests creating a series of curated round table events to move such prospects over the finish line.
Aakrit: “Round table discussions in the middle of the funnel help a lot. Bring 15 – 20 people, 3 – 4 customers, and the rest prospects in the middle of the funnel. The customers hopefully speak good things about you. The prospects hear real-life case studies, which helps in accelerating the sales process.”
These events create a peer-to-peer environment where potential clients hear directly from existing customers. It’s a powerful social proof in Indian business culture, where peer recommendations carry weight.
Does aggressive discounting help?
Aakrit strongly advises against aggressive discounting, contrary to popular assumptions about the price-sensitive Indian market.
Aakrit: “You might think aggressive discounting would speed up deals in India, but it’s not the way to go. Sure, people might jump at a cheap offer, but it’s actually the worst thing you can do. It screams desperation, and that’s not the image you want. I’m not saying no discounts at all. A small, last-minute sweetener can work wonders. Something like, hey, if you close by the end of the quarter, I can throw in a 10% discount. That’s different.”
“Offering a 50% discount? That’s a recipe for disaster. It won’t work, and you’ll attract the wrong customer. They won’t value your product, they’ll cause headaches, and they’re unlikely to succeed with your solution. You want customers who see the value in your offering, not bargain hunters.”
Another wrinkle of doing business in India is that while email seems like the go-to channel for business communication, WhatsApp is often more effective, especially in accelerating sales. Aakrit says some of his best deals started as WhatsApp messages.
“What worked for me to re-engage customers and boost upsells? I created a WhatsApp broadcast list. It was a game-changer, especially since email doesn’t cut it. Here’s what I did: Every time I met a new customer, they went straight on the list. It is an ever-growing network of buyers from various companies. Before I knew it, we had 200 – 300 contacts.”
“Whenever we had useful info to share, I’d blast a message to the whole list, tweaking it to be super personal, like a one-on-one chat. The results? Mind-blowing. Open rates of 70 – 80%, and 30 – 40% would respond, even with a quick “Great!” or “Amazing!” or “I want in!” It was like having a direct line to decision-makers. Way more effective than any email campaign.”
While this approach is effort-intensive, Aakrit emphasizes that this level of effort is part of doing business in India:
“I’ve told founders to do this so many times, and they’re like, ‘Oh my God, that sounds like so much effort!’ But this is how business happens in India, plain and simple.”
Building The Org: Crafting a Unique Team Structure for Indian SaaS
The playbook for building a SaaS org in India differs significantly from the Western approach. Let’s start with Sales.
Rethinking the Sales team for the Indian market
Conventional wisdom in the US SaaS market suggests hiring a VP of Sales at USD1 million ARR. However, the Indian market demands a different approach. As Aakrit explains:
“In India, you don’t need a VP of sales until you reach a Rs 20 crore (USD 3 million) business, which means having 100 enterprise customers with an ACV of Rs 20 lakhs. In fact VP of sales would be counterproductive.”
Why so? This is rooted in the relationship-driven nature of Indian business.
Aakrit: “You’ll try to handover customers to him and you’ll move to new deals. But customer won’t talk to him. The problem is not the person, but the market dynamics. Your customers want to see you front and center.”
Instead of rushing to hire a VP of Sales, he recommends hiring strong Account Executives (AEs) first.
Aakrit: “Get strong mid-level AEs. Their job isn’t US-style ‘I’ll do end-to-end deal.’ Once you open the door and do the first meeting, they step in to run the deal and bring you in to close it. This is absolutely doable till 100 customers, founders can handle it.”
“Unlike the US, get an AE on day zero. While you are running around looking for new customers, they’ll move the deal forward. On day zero, bring in an AE, tell them your job is to come with me to meetings, so that it also feels like it’s a big company, I have somebody, I am not an only guy.”
The VP of Sales role differs in the Indian context.
“After the first 100 customers, you can bring in VP of sales, but you have to be smart about it. You’ll still need to open the door for the largest relationships and the VP of sales takes it forward. But more importantly, you’re hiring the VP of sales because now you need somebody to manage your AEs.”
When setting quotas and compensation for AEs, the Indian market diverges from Western norms:
“Quota should be Rs 3 crores a year in new sales from AE, assuming average AE salary Rs 30 lakhs. This is a 1:10 ratio. In the US it’s 1:4 or 1:5. Here it’s 1:10 due to lower margins and higher CAC.”
Finance Team
Aakrit heavily emphasizes getting a strong finance person early in your journey.
“If I were to rebuild this company, the first hire, outside of product and tech, would be a senior finance person. It’s crucial for building a business in emerging markets. Chasing customers for contracts and POs, collections, and metrics; it’s a drain without the right person.”
He suggests hiring someone from a non-SaaS background is okay as long as they understand business metrics.
“In finance, you don’t need SaaS talent. Someone who knows how traditional businesses are built in India is better because they’ll bring more structure and can provide a good foil to tell you how finance works.”
Customer Support Team
For Customer Success (CS), look beyond traditional SaaS experience.
“There’s plenty of account management talent in industries like ad agencies and manufacturing. So, it doesn’t have to be someone with previous CS experience in a SaaS company. You need someone who can manage an account and calm a customer down.”
A unique aspect of Indian SaaS companies is the emphasis on implementation.
“The biggest area that nobody talks about enough but is perhaps the most crucial part of building a software company in India is implementation. If done correctly, it can be a great selling point for your product.”
Navigating The Collection Maze
While vendor payments are often taken for granted in mature markets, they can be a significant hurdle for SaaS companies in India.
Aakrit doesn’t mince words about the collection issue.
“This is the biggest challenge of building a SaaS company in India. This behavior hasn’t changed and continues to be a problem. Many companies will delay your payment for no good reason and then you have to consistently chase them to get your money out.”
Aakrit offers practical strategies to address the collection challenge:
1. Address it Early in the Sales Process
“Mention these things at the top of the funnel in the initial meetings, don’t take it for granted. Say, we have a 30-days cycle. They’ll say no we have a 90-days cycle. After negotiation you agree on say 60-days. But don’t take 90-days on face value. Negotiate to bring it down. And then mention it to your customer at multiple points to re-enforce it.”
2. Adjust Your Expectations and Processes
“Money won’t come before 60 days no matter what. So you should adjust your processes. For instance, instead of asking for annual billing cycle, sometimes it’s better to have a quarterly billing cycle. As the amount is lower, so people tend to pay it faster.”
3. Focus on collections from day 1
“Hire a CFO who loses sleep over delayed payments and is very particular about sending reminders to customers. From day 1, have someone in the finance function run pending due report and chase customers.”
4. Be Ready to Take Action
“Be aggressive and pull the plug if the customer becomes a repeat defaulter and the money just doesn’t come; don’t be afraid. Send them legal notices. We’ve paused accounts of some large clients for non-payment.”
Pricing Strategies for the Indian Market
Aakrit emphasizes the need to approach pricing from a fundamentally different angle:
“You need to reimagine pricing from the ground up based on what the customer wants versus being stuck to recurring subscription or volume-based pricing. Remove all those glasses completely.”
For instance, a critical factor in India when it comes to pricing is on-premise vs. Cloud Deployments. Aakrit explains:
“Some enterprise customers prefer software on their cloud. If you see this with your customer, your pricing changes. Then you’re almost selling this one time. You are selling it for 3 – 4 crores without recurring fees and an AMC, which is fine. Don’t get trapped by the dogma that this is not recurring SaaS revenue.”
This approach aligns with the preferences of many Indian enterprises that are cautious about cloud deployments due to regulatory or cybersecurity concerns.
When customers are comfortable with cloud deployments, Aakrit recommends a cost-plus pricing model:
“Are they okay being on your cloud? You need to charge them a recurring fee, which is cost plus. Roughly what is your cost of serving AWS or Azure, and how can you charge a 50 – 70% margin on top.”
This approach focuses on understanding your costs and adding a margin rather than basing prices on perceived ROI. Aakrit suggests that perceived ROI is less relevant in India.
So What Does This All Mean?
Let’s be honest.
Building a SaaS business in India is not for the faint of heart. It requires fundamentally reimagining the traditional SaaS playbook, from sales strategies to organizational structure. The Indian market demands a high-touch, relationship-driven approach, where founders must remain deeply involved in customer interactions even as the company scales. Pricing strategies must be tailored to local preferences, and collections must be kept up to date. Yet, for those who can navigate these challenges, the rewards are substantial in a rapidly growing market.
The key to success lies in considering the unique characteristics of the Indian business landscape as a ‘feature’ rather than a ‘bug.’
This means prioritizing customer relationships over product features, building a strong personal brand as a founder, and creating flexible pricing models that align with local needs. It also requires a robust finance function from day one and a willingness to stand firm on payment terms. As the Indian SaaS market matures, those who can master these nuances will be well-positioned to build sustainable, profitable businesses that compete globally.