Shortage of Deep Tech Talent Could Hinder Growth of Indian B2B SaaS Firms, Nasscom Report Finds

• ByStartupStory     |    August 23, 2023

A report released by Nasscom, in collaboration with EY, highlights that a shortage of deep tech talent in sectors like Artificial Intelligence (AI), Machine Learning (ML), and advanced computing could hinder the rapid growth of India’s enterprise Software-as-a-Service (SaaS) firms. According to the report titled ‘Breaking Ground: Unraveling the deep tech potential in Indian B2B SaaS‘, around 80% of chief experience officers (CXOs) from leading SaaS firms interviewed stated that the scarcity of talent in deep tech, coupled with inadequate deep tech infrastructure, might impact growth.

“Deep tech requires specialized expertise, but finding and retaining skilled professionals is a challenge due to high demand and limited supply,” the report titled ‘Breaking Ground: Unraveling the deep tech potential in Indian B2B SaaS’ said on August 22.

Alongside the talent shortage, CXOs have also raised concerns about the lack of patient capital, which sustains funding during extended periods without immediate returns.

The report acknowledges the potential of deep tech-focused B2B SaaS firms to achieve sustained Annual Recurring Revenue Compound Annual Growth Rates (ARR CAGR) of 30-50%. However, it also emphasizes the importance of addressing growth impediments to make India a globally competitive deep tech-led B2B SaaS destination.

Currently, India’s unicorn club features three deep tech unicorns: 5ire, Uniphore, and Gupshup. 

Among the top Deep Technologies available, Artificial Intelligence and Machine Learning are the most leveraged deep tech with about 54 percent of use cases, followed by big data or descriptive analytics at 39 percent and intelligent automation at 7 percent, the report said. 

“Attracting talent necessitates creating a stimulating work environment and offering incentives to cultivate a culture of invention,” the report said.

“Striking a balance between investors’ expectations and the need for sustained financial support is crucial for deep tech start-ups,” the report said. Despite the challenges the report also said that the deep tech-focused B2B SaaS firms can potentially unlock sustained Annual Recurring Revenue CAGR of 30-50 percent.

It also reveals that 25% of Indian B2B SaaS companies studied were focused on inventive deep tech, with over 1400 patents filed collectively in the past five years, compared to 574 patents filed in the preceding decade.

“As we move ahead, prioritising innovative and inventive deep tech and at the same time addressing the growth impediments will be fundamental in building a globally competitive and the most attractive deep tech-led B2B SaaS destination in the world,” said Sangeeta Gupta, senior vice president, and chief strategy officer at Nasscom.

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