SaaS Market

Market Overview

The global SaaS market size was valued at USD 161.2 billion in 2021 and is projected to reach USD 382.59 billion by 2030 at a CAGR of 10.08% 2022 to 2030.

Cloud-based software as a service (SaaS) is a cloud service that virtually delivers software applications over the internet. The cloud delivery model is employed to deliver SaaS. A software provider maintains its own networking, servers, databases, and computing resources to host programmers and associated data. The SaaS platform is highly correlated with application service providers and on-demand computing software delivery models in which the provider hosts the client's software and distributes it over the internet to authorized end users. SaaS eliminates the need for businesses to install and operate the software on their own PCs or in their own data centers. No longer required are hardware acquisition, provisioning, and maintenance, as well as software license, installation, and support.

One of the newest trends is the increasing use of artificial intelligence (AI) in healthcare, BFSI, and others. Cloud and AI technology are integrated by significant participants in the software as a service market to help customers manage their work by providing cutting-edge, secure services.

The development of significant data diagnostics drives the need for SaaS approaches combined with AI and cloud services throughout the healthcare system.

Market Dynamics

Drivers for the Global SaaS Market

A Rise In Demand For Smart Devices And Their Applications Is Driving The Market

End-user demand for intelligent devices is bolstered by the rapid expansion of email, instant messaging applications, and video calls. It is expected that this will contribute to the expansion of the software-as-a-service market. Through SaaS applications, people can connect from anywhere besides offices; consequently, the growing trend toward working from home across the globe is anticipated to provide ample opportunities for the SaaS market's growth in the near future. In addition, the rising demand for business outsourcing among corporations will contribute to the market's growth over the period of the forecast.

Moreover, during the lockdown, many businesses opted for cloud-based software platforms in response to the COVID-19 outbreak, which had a positive effect on the software-as-a-service market. The government-imposed lockdown has resulted in a significant increase in the adoption of cloud software platform services, such as SaaS, by numerous businesses. SaaS adoption for the virtual management of work in enterprises has been bolstered by the increased use of public cloud services during remote work. Consequently, the significant rise in the global adoption of third-party software services during the pandemic contributed to the expansion of the market.

Simplicity Of The Technology Drives The Market

The increasing use of small-scale SaaS is another factor that will drive market expansion during the forecast period. SaaS is a product appropriation model that provides businesses with a great deal of flexibility and cost-effectiveness, making it a highly viable option for a variety of action plans and businesses. In addition, it is well-known among businesses for its ease of use, client accessibility, security, and extensive network. Thus, the phase of programming-as-a-service results in the greatest productivity under all conditions.

Growing Cloud Services Investment by Major Players 

The increased spending on cloud-based solutions by end-use businesses is projected to accelerate the expansion of the software as a service industry in the following years. A Gartner analysis projects that end-user spending on cloud application services would total approximately USD 102.80 billion by 2020. The major market participants are concentrating on expanding their investment to expand their product line.

Additionally, cutting-edge technologies like edge computing, virtualization, and containerization are widely embraced throughout end sectors. The demand for SaaS services will increase due to the increasing acceptance of these technologies, opening up several market opportunities for participants.

The continued development of technologies like artificial intelligence (AI), the cloud, big data, and others is also expected to increase demand and support the expansion of the software as a service business.

Market Restraints

Privacy Concerns Mark A Major Hurdle for The Market

Users utilize cloud services to store sensitive business and personal information and data. However, privacy and security concerns regarding data loss, application vulnerabilities, data breaches, unanticipated emergencies, and internet cyberattacks are anticipated to impede the market's growth. Security is a major concern for many small and medium-sized businesses.

For example, in July 2021, a "colossal" ransomware attack damaged nearly 1,500 businesses across the globe. The majority of affected businesses are small and medium-sized, including dental offices, automobile dealerships, libraries, schools, and grocery stores.

Market Opportunities

A Variety of Applications Will Bring In New Opportunities for the Market

The growth of the SaaS market is fueled by the increasing demand for a single solution to assist businesses in resolving business problems. Companies utilize SaaS Platform software, which integrates a variety of applications such as customer relationship management (CRM), business intelligence, supply chain management, and e-commerce systems and can be tailored to meet specific business requirements and deployed across corporate networks on a number of cloud platforms. Companies require business-oriented SaaS platforms that encode corporate policies, rules, and processes and are built in accordance with specific business requirements as their businesses expand. As the number of mobile users in the workplace increases, these applications can assist employees in achieving higher levels of productivity. This also helps to improve communication, boosts corporate efficiency, and enables them to identify new revenue-generating market opportunities.

Regional Analysis

From 2022 to 2030, the Asia-Pacific market is anticipated to grow at the fastest rate, 12.1% annually. China and India contribute positively to the growth of the market due to the rising demand for cloud-based software outsourcing and the increase in the number of small and medium-sized businesses outsourcing in the region. To reduce the cost of on-premises software deployment, SMBs outsource cloud-based software platforms to a significant degree. In addition, the market is anticipated to benefit greatly from the IT industry's rapid expansion. In addition, the increasing number of secured internet servers in China, Japan, and India contributed to the expansion of the software-as-a-service market over the forecast period.

In 2021, it was anticipated that North America would account for approximately 50.0% of the market. Contributing positively to the expansion of market revenue in the United States. The presence of well-established market participants, such as Salesforce, Microsoft Corp., Google LLC, and IBM Corp., is one of the factors driving the market growth. In addition, the developed IT infrastructure facilitates the deployment of cloud-based virtual services in the region, thereby contributing to the region's dominant market share in the SaaS industry. In addition, substantial expenditures on cloud infrastructure and the availability of a large number of secure internet servers contributed to the largest market share. In addition, the dominance of the regional market can be attributed to the development of mobile applications and the introduction of numerous smart devices.

Europe is predicted to have rapid growth. The popularity of cloud tools, including project management, inventory management, office collaboration, and sales tracking, has increased, contributing to the region's growth. Germany and the United Kingdom are among the nations that have adopted SaaS the fastest.

During the study, it is anticipated that the South American market will expand significantly CARG. The market is expanding due to increased investment from market participants and local governments. The major players want to spread their influence over developing nations like Argentina, the Caribbean, and other countries.

Due to an increasing number of start-ups and local companies from developing nations like South Africa, Israel, and the GCC, the market size and forecast in the Middle East and Africa are in the development stage. These nations are making investments to advance cloud services that are SaaS-based.

Segmental Analysis

This market can be segmented on the basis of type, region and competitors. In 2021, enterprise software dominated the software-as-a-service market and accounted for more than 70% of the market's revenue. Small and medium-sized businesses are increasingly adopting cloud-based software applications, which has contributed to the growth of the market. Numerous major companies, including IBM Corp., Microsoft Corp., Salesforce, and others, provide advanced enterprise SaaS to businesses and have contributed significantly to market share. In addition, the high expenditures made by businesses on business outsourcing contributed to the segment's dominant market share.

Over the forecast period, the productivity software segment is expected to grow at a significant CAGR of 10.6%. The market for SaaS is primarily driven by the rising demand for productivity software among small businesses, as this software service enables businesses to operate without an office. In addition, the substantial availability of productivity applications for mobile applications, such as calendar functions, email, and note-taking, contributes to the growth of the SaaS market over the forecast period. In addition, the increasing adoption of productivity SaaS for data analytics by businesses will contribute significantly to the growth of the software-as-a-service market over the forecast period.

Recent Developments

• In November 2022, the ModelScope Platform and New Solutions were Launched by Alibaba Cloud to Lower the Bar for Business Innovation Materialization.
• In January 2023, In collaboration with Google Cloud, Revionics created a data-driven pricing platform with BigQuery, Looker, and other tools for speed, scale, and automation.
• In December 2022, Mediobanca and Oracle will modernize the CIB core banking system.