Challenges of Scaling a SaaS Business in India

By Nigel Lobo W’08/WG’13, Founder of Quikchex

After graduating from Wharton in 2013, I moved back to India to build Quikchex – a cloud HR Software platform focused on the Indian SMB market. At Quikchex, we help business owners and HR Managers automate their backend HR processes like payroll, leave and attendance. Typically most SMBs manage these processes extremely manually (think Excel spreadsheets), resulting in an inefficient allocation of time and resources.Saas Image 600x450Over the 2 years since we went live with our product, Quikchex has seen a high degree of success. Today we have thousands of users who use our product on a daily basis all over the country. Our clients range from some of the fastest growing tech companies in India, to more traditional businesses.

Yet, despite our success, I realize that scaling a SaaS business focused on selling to SMBs in India does have some intrinsic challenges that mature markets like the U.S do not have:

  1. High Degree of Handholding: Indian business customers have been accustomed to a high level of handholding. Need a credit card? Don’t worry – the bank will send a Relationship Manager over to your office to personally guide you through the forms. The SaaS market is no different. Often clients might refuse to proceed with the sales process, unless they physically meet with the sales rep in their office. Similarly, once a client is brought on board, they often require significant onboarding and training support. This hampers the velocity with which a SaaS business can scale both its customer acquisition and customer support. Contrast this to mature markets like the U.S, where the client signs up for a free trial on the website, evaluates the product and finally proceeds with the implementation independently.
  1. High Price Elasticity: Indian SMB customers generally tend to be highly price elastic, owing to a number of different factors including lower discretionary spending budgets. As a result, they tend to be very demanding when it comes to pricing. Everything is up for negotiation, making pricing at face value a challenging task. As a result sale cycles tend to get drawn out longer than they should, making scalability slightly more challenging.
  1. Billing Infrastructure Issues: In markets like the U.S, SaaS customers generally input their credit card details, and they are automatically billed every month. In India, government security regulations ensure that recurring billing is not an option (due to authentication required for every transaction). As a result, it becomes mandatory to implement a strong accounts receivable infrastructure as you scale, which is yet another hurdle young startups have to face.

While scalability for SaaS startups does have its challenges, the SaaS market is rapidly growing. A recent Google / Accel Partners report indicated that the SaaS market in India should cross the US$10 billion revenue mark by 2025. As an entrepreneur in the space, it is hard not to stay optimistic and hope that market evolves to eliminate the roadblocks that I have highlighted.

Nigel Lobo PhotoBio: Nigel Lobo W’08/WG’13 is currently the CEO and Founder of Quikchex, an HR and Payroll Software platform, helping small and midsized businesses automate their backend HR processes. Prior to doing his MBA at Wharton, Nigel worked as an Investment Banker at J.P. Morgan in New York, focused on the Metals and Mining Sector.