Pandemic has hastened technology investments in most global companies. Companies have been launching digital transformation initiatives, new workplace access models or enhancing consumer experience etc. Remote working/digital economy/automation and supply chain enhancements have made accelerated spends in technology a reality and these trends are here to stay for the next decade. We are entering an era where technology enabled businesses and companies will drive larger value creation for all stakeholders.

Beyond new application areas emerging technologies like Cloud, data and analytics, artificial intelligence, machine learning and industry 4.0 are rapidly expanding the horizon of opportunity. The technology infrastructure in enterprises which underwent a large refresh with Enterprise Resource Planning is also ripe for change. While India has emerged as a global leader in outsourced IT services and the industry is poised to grow to $350 billion in the next five years, the opportunity arising from many of the areas outlined above will be much larger and can easily be a $1 trillion market opportunity for Indian companies in the next decade.The global opportunity which is evolving is being embraced by entrepreneurs and investors and this has led to a very strong positive momentum in the Indian startup ecosystem. According to the Hurun Index, India today ranks as amongst the third fastest growing startup ecosystem in the world and recently replaced the UK as No 3 country with 54 unicorns. Investment in SaaS companies increased 170% in 2020 and it's expected to reach $ 4.5 billion in 2021. This interest spans across early stage companies with deal size increasing by 85% in the seed stage and later stage companies. Bain India SaaS Report 2020, says the number of deals which are beyond series D have also gone up by 20%.

The opportunity is large and spans across a wide spectrum. The areas which hold promise are as follows

Horizontal SaaS solutions: This covers areas like CRM, enterprise collaboration, HR tech, application and developer productivity. Many Indian companies have built solutions which have been built for companies in India, scale the business and subsequently started addressing the global market. Some examples in this space are companies like Zoho, Postman, Freshworks , Browserstack etc. Freshworks is a great example of not only addressing global markets but also gaining acceptance in overseas capital markets and was the first Indian SaaS company to be listed in NASDAQ and currently commands a market cap of close to $10 billion.
Vertical SaaS solutions: These are solutions which address specific vertical related business processes. With tools being available for seamless data integration this is a great opportunity for Indian SaaS companies to identify the right niche in vertical segments and build solutions around those niches. Here again a number of Indian SaaS companies have built their products for Indian customers, scaled the solution and then started addressing global markets. Many of these companies have revenue ARR (Annual Run Rate) comparable to their global peers and hence are able to compete effectively with global competition. Some examples of companies which have achieved scale in vertical solutions are Eka software, Capillary Technologies, High Radius, ChargeBee etc.
Technology enablement for global SME’s: this has largely been an untapped market for the technology industry and with the changes happening it presents a huge opportunity. Cost of technology is dropping and hence is becoming affordable to a larger spectrum of enterprises. Technology also enables SMS to compete more effectively with larger companies. Indian Companies like Khatabook, Open etc. are aggressively growing this market with ambitions to be present globally.

The Global SaaS market is about $150 billion and growing at a CAGR of 23% and according to Nasscom, India’s market share in this is now only at high single digits. The Indian market for SaaS products is also growing rapidly and will grow 6X by 2025. With the strong growth opportunities in India many resourceful entrepreneurs are demonstrating that they can build a business with Indian customers and then start addressing global markets. With the strong momentum demonstrated, Indian SaaS companies are expected to garner a market share of 19% by 2025 (Indian SaaS revolution 2021- Chiratae-Zinnov report).

What is enabling the rapid growth of 70% + in Indian SaaS? There are enablers which help this. The government has played a key role in nurturing and building a strong startup ecosystem. There is also a diverse set of investors both foreign and domestic who started focusing on supporting these companies. The talent pool available in India is another big advantage. Coupled with this is the emergence of serial entrepreneurs and professionals who worked with large global product companies and are willing to take the risk and venture into entrepreneurship.

The median revenues of global SaaS companies have doubled in the last five years, but their valuations have gone up 5X in the same period. The market for technology products is strong for the foreseeable future and hence the opportunity for Indian SaaS companies is immense. With the support of the strong ecosystem which is already in place the number of unicorns in India can easily grow 10X from the current levels in the next five years. The day is not far off when we will see over 1000 unicorns in the Indian SaaS ecosystem. Not only will these companies create significant value for the stakeholders but it will also create a large number of high-quality jobs which are of great value to the Indian economy.

When India becomes a $5 trillion economy can Indians SaaS companies contribute at least 10% to that? The answer is there's a high probability. Indian entrepreneurs are fearless and have the courage and vision to capture global markets. There are great role models already within this Indian startup ecosystem and soon we'll see the number of role models will rapidly increase. This will help us achieve a double-digit contribution to the $5 trillion economy of India and the mantra is simple - build for India - win the globe.

(The writer is Managing Partner- Mela Ventures, Chairperson, Nasscom Foundation and Member, VC Council, IVCA)

(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

Trends and innovations in logistics industry in 2021

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Having adapted efficiently to the volatile global scenario, the supply chain and logistics sector continues to evolve and grow with multiple trends emerging this year.

Synopsis

The logistics and supply chain industry have been at the forefront of the disruption caused by the global Covid-19 pandemic.

By Saahil Goel, ET CONTRIBUTORS

Dec 25, 2021, 11:33 AM IST

The onset of the global COVID-19 pandemic upended lives and livelihoods, and life as we knew it took a drastic turn. From the business standpoint, companies across the world, regardless of their size and sector, faced large-scale disruptions. However, the logistics and supply chain industry were at the forefront of this disruption. The crisis also underscored the significance of streamlined, efficient logistics operations.

Nearly two years later, as the world gradually recovers from the pandemic’s impact, the logistics industry has undergone a major transformation. Having adapted efficiently to the volatile global scenario, the sector continues to evolve and grow with multiple trends emerging this year. On that note, here are the top 10 logistics trends and innovations in 2021.

Accelerated growth of technologies
While some players in the logistics industry have technology at the heart of their strategy, the industry has largely been operating on manual processes up until a few years ago. Recent years, however, have seen increased technological adoption, and the onset of the pandemic has further accelerated this. While 2020 saw businesses racing to realign their strategies and alter their model of working, 2021 has witnessed several technological innovations being implemented for the smooth functioning of logistics. Today, nearly every process in the logistics sector – from order taking, inventory, and warehouse management, to packaging, shipping, and last-mile delivery, is automated. This trend is likely to prevail for the foreseeable future as technology continues to gain a stronghold in the world.

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Augmented warehouse management
While warehousing often doesn’t get its due credit outside the logistics industry, it is one of the pillars holding up the sector. Robust warehousing is one of the keys to an efficient logistics ecosystem. Logistics players have begun to automate almost every aspect to ensure the human resources are dedicated to the more important, complex tasks to ensure seamless warehouse management. Although the pre-pandemic times witnessed tech integration in warehousing too, 2021 has proven to be the year of advancements. Logistics platforms have introduced robotic order picking and even packaging to save time and cost, and today warehouse management services have been augmented for smooth end-to-end shipping services.

The shift in shopping habits

2020 ensured we were all confined to our homes, working and shopping remotely. This resulted in a large-scale shift in consumer behavior, preferences, and expectations when it came to shopping and shipment delivery. With the growing internet penetration and smartphone usage an increasingly shift to online shopping was witnessed within the consumers. According to an expert from RedSeer Consulting, India’s e-commerce sector is expected to clock USD 55 billion in sales by the end of 2021. This shift in online shopping that has led to a surge in need for efficient logistics has platforms constantly enhancing their offerings for ultimate customer satisfaction.

Personalized customer experience
As consumer preferences evolve every day, they are expecting a more personalized e-commerce and logistics experience, one that pampers them and offers the utmost convenience from end to end. Logistics platforms are deploying technologies such as AI, IoT, and Big Data to garner insights into consumer preferences and customize their experience to cater to this growing demand.

Sustainable practices
Apart from teaching us to prioritize our health and safety, the pandemic also underscored the importance of being eco-friendly. Logistics platforms have jumped on the sustainability bandwagon and are mindful of their operations’ impact on the planet. Sustainable logistics systems aim to increase profitability and reduce environmental impact for long-term success. The logistics industry is one of the largest and uses a significant amount of packaging. To ensure sustainable practices, platforms have switched to eco-friendly, sustainable packaging material and are even opening warehouses closer to the customer’s location.

The rise of the D2C market
With over 800 D2C brands in the country at present, the sector is projected to touch $100 billion by 2025. 2021 witnessed several brands and sellers adopting the D2C business model owing to its vast consumer reach and improved engagement. As the D2C market gains further traction, more and more D2C brands are seeking out platforms that offer end-to-end logistics and fulfillment services, and this trend is likely to continue in the coming months/years.

Focused last-mile deliveries to improve customer experience
As the logistics industry realigned its strategies and altered its operations, seamless, efficient last-mile deliveries have proven to be one of the cruxes of customer satisfaction. With customer-centricity at the core of their operational strategy, logistics platforms are bolstering their efforts to provide customers with hassle-free last-mile deliveries by providing them real time updates and better sync up with their delivery partners. In the coming time it is becoming increasingly important to provide last mile delivery to meet customer expectations.

Flexible, on-demand warehousing and fulfillment
With 2020 causing global supply chain disruptions and leading businesses to scramble to rethink their model of working, the need for smooth logistics operations skyrocketed. As the industry itself evolved to meet changing demands of customers and regain footing post the pandemic’s impact, on-demand warehousing and fulfillment have become one of the most sought-after, best solutions for convenient storage and shipping for brands and sellers. On-demand services reduce the costs of shipping and streamline the fulfillment process, ensuring that sellers can reach customers within 1-2 days.

Omnichannel services
The days when brands opted for a single channel and reached out to customers through that are long gone. Today, with the support of technology and the growing smartphone usage, and consumers being more tech savvy, omnichannel services have become the go-to option for brands to expand their customer reach and engagement. Brands are leveraging channels such as social media platforms, websites, whatsapp, etc., to connect with customers and drive sales. Through omni channel approach brands get an opportunity to reach out to new customers and gain their loyalty which leads to increase in sales and better operational efficiency.

Contactless Deliveries
The pandemic has created widespread apprehensions surrounding physical contact with other individuals, and consumers are now increasingly preferring contactless services for nearly every purchase they make. To that end, the logistics industry is offering contactless deliveries that can be verified by the customer via an OTP sent to their phones. Such contactless services have gained immense traction to the extent that they are likely to become a set standard in the industry.

Bottomline
Today with the growing demand for online deliveries and availability of goods by people has led the industry to grow at a CAGR of 10.5% by 2025. If we compare the logistics industry that existed just a few years ago to the one that exists currently, we can find a world of difference; such is the transformation the sector has undergone. We are on the verge of a very exciting, rapidly moving and transformational future, as technological advancement continues the logistics industry will progress and grow further.

The writer is CEO and Co-founder, Shiprocket