Tamil Nadu wants to be global SaaS hub, eyes Rs 150-bn IT, ITeS investments

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The Tamil Nadu government has said that it would give impetus to the software-as-a-service (SaaS) sector to make the state a global SaaS destination. The state government is expecting an increased investment from the IT and IT-enabled services (ITeS) sectors in the proposed Global Investors Meet (GIM) 2019.  

Speaking at the valedictory session of CII Connect 2018, an event organised by the Confederation of Indian Industry (CII), Chief Minister Edappadi K Palaniswami said, "Chennai is the SaaS capital of India. We propose to give a huge impetus to this sector to make Tamil Nadu a global SaaS destination."     

Over 20 SaaS-based companies, led by Zoho Corporation and Freshworks, have their Indian operations spearheaded from Chennai, according to industry experts.  

At present, the sector in the state is generating a revenue of over a billion dollars and employing over 10,000 workers. It has raised over $500 million so far. However, many SaaS firms are relying more on revenue for future growth, said an industry expert.   

"The largest player, Zoho Corp, has over $500 million in annual recurring revenue and Freshworks has around $100 million. With other firms included, the revenue of the SaaS industry in Chennai would be over $1 billion," said Suresh Sambandam, founder and CEO of Orange Scape and part of SaaSX, a movement of SaaS-based companies. 

Chennai-based SaaS firms have so far raised over $500 million, even as the largest in the flock, Zoho Corp, is a bootstrapped company. Sambandam said that even though his own firm, Kissflow, is funded, it has been working close to a bootstrapped fashion. 

"One good thing about Chennai is we make more revenue than funding," he added. 

Freshworks, alone, has raised close to $250 million in several rounds so far. Recently, Freshworks announced its expansion plan to set up its second office in the country in Bengaluru.   

During the first GIM held in 2015, Zoho had committed an investment of around Rs 30 billion to set up its facilities in the state. 

The state government has said that it is expecting around Rs 150 billion in investment proposals from the IT and ITeS sectors during the upcoming GIM edition, as compared to Rs 109 billion during the previous edition.  

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