Indian IT industry is classified by Nasscom as Software-as-a-Service (SaaS). In the 80s and 90s, the clients bought software from the IT companies, hosted on local servers on the premises of the client. Internet arrived on the the scene. Later, cloud computing appeared. The dynamics of the industry changed. Companies could run a single version of their software across the remotely placed servers of multiple clients. Individual client servers were a story of the past. It reduced costs of both developing and maintaining software as well as hardware.
The industry was selling the license. Saleforce, a US company, started renting out its software for usage. Thus what was once a capital expenditure became an operating cost. Business was at liberty to try new types of software.
It led to standardisation of APIS — the interface of different pieces of software. Low end work was automated, e. g. maintenance of process like error fixing, traffic management, customer support, security support. AI and ML came in handy to do this. Cloud service providers such as Amazon replaced IT service players who managed IT infra on premise. SaaS companies can now focus on software development without worrying about the hardware.
In the first wave, IT companies served small and medium businesses of the US. India genericised the existing higher priced products. It leveraged its cost advantages. Off-shore work was encouraged. In the second wave, SaaS startups served corporates or enterprises. They did consulting too. They also covered mobile phones and AI.
Though new companies benefited in the second wave because of innovations, existing big companies founded before 1984 too were not lagging behind.
Recently companies have built products and are offered as a part of overall services package to the client. These product business could be separated from the services parent. Infosys acquired Edgeverve in 2014. It merged its banking software Finacle into its business. Polaris sold its old services business and focused on core banking solution Intellect Design. Mastek separated its Majesto — insurance SaaS business. The old licensing model continued but it has recently started to change.
There is new SaaS 2.0 model. In a company, now departments such as marketing and finance can buy software as needed without the approval of Chief Information Officer (CIO). For instance, marketing department can buy a media planning or campaign automation tool. It is a bottom-up new wave. There is increased adoption of open source software. There are Indian SaaS 2.0 startups such as Postman, Julia Computing and Hasura.