London Calling: Why the city is a haven for Indian SaaS companies’ expansion dreams

By Hemin Bharucha

The Indian (software-as-a-service) SaaS success story is one for the books. Despite market headwinds and a global slowdown, in 2022, the industry brought in a total annual recurring revenue of $12 – $13 billion, an increase of four times over five years prior. Companies are being founded in unprecedented numbers, showing irrefutable progress and promise of a successful future. It comes as no surprise that homegrown SaaS firms are poised to touch an annual revenue run rate (ARR) of $35 billion by 2027. Armed with proven models of growth and unwavering investor confidence, the industry, which is second to only the United States in scale as well as maturity, is building best in-class companies across sectors.

Encouraged by this growth, global expansion remains a top agenda for Indian SaaS companies. Going global requires finding an anchor in a market which has a robust and business-friendly environment with favourable regulatory and infrastructure development. London has emerged as a favourite destination for SaaS companies to invest in. A mature, high-spending consumer market, an open and liberal economy, as well as a notable technology hub, has made the capital city a go-to for these companies.

London shares strengths in tech and innovation with India making it a natural market for Indian companies to grow into. Innovation and digital transformation are high on the agenda for London and according to data from Dealroom, the value of London’s tech ecosystem has grown exponentially in the past 10 years from $70bn in 2014 to $621.5bn in 2023. Innovation, and digital transformation have been at the core of Indian SaaS technology development, and thus the synergies between two are conducive to high growth.

UK’s capital city has already established itself as a favourite for FDI from world over. Data from FDI markets shows that over 320 companies were set up in the capital in 2023, keeping London’s position as the third top global destination after Dubai and Singapore intact. Indian companies looking at the city as a base for their global expansion is not surprising.

Adding to the overall positive sentiment and a favourable ecosystem, governments of both of countries have also invested in exploring bilateral investment treaties and a free trade agreement. To explore new avenues of investment in shared priority sectors, UK-India Infra Financing Bridge was also announced last year. In 2021-22, the total inward FDI to the UK from India was £9.3 billion and created 8,664 new jobs. In fact, no other country than India created more new jobs through the FDI projects in this period. India and UK have also been working closely to develop innovative climate tech solutions for sustainable mobility. Some of the most innovative Indian companies such as Roadmetrics, an AI software mobility company from India has chosen London as its UK headquarters. London has been a clear choice for Indian companies investing in the UK and has proven to be a profitable proposition for them. In 2023, out of the fastest growing Indian companies in the UK tracked by Grant Thornton as a part of their India Meets Britain Tracker, 45 percent were located In London.

With favourable policies, London is known for the ease of doing business and raising capital, considering the strength and size of its VC and investor community, can be easier than other countries. Indian SaaS companies that have chosen the UK market as a base for global expansion already come with an upgraded go-to-market playbook, a service quality which is top notch and cost-competitiveness. With the ease of raising capital in London, these companies are already looking at steady growth and financial security.

London’s appeal as a global financial and technology hub, economic stability, unmatched access to capital markets makes it the ideal choice for Indian tech, especially SaaS companies to invest in and expand their operations. Favourable regulatory ecosystem and a high rate of adoption of new-age tech such as AI will fuel growth of these companies building the next generation of Indian SaaS companies.

The author is Country Director – India, London & Partners, and the views expressed in this article are his own