Indian SaaS Companies Want To Capitalize On The Generative AI Trend To Draw Both Clients And Investors

The top software-as-a-service (SaaS) companies in India are investing in and exploring the booming field of generative AI technology to attract investors and eventually reduce their customer acquisition costs. This includes developing new AI or artificial intelligence capabilities and integrating the AI chatbot ChatGPT into customer-centric operations.

Freshworks’ CEO, Girish Mathrubootham, stated in an interview that the company will make considerable expenditures to include AI, particularly generative AI, into its operations.

“If you stop to think about it, customer experience and the core objectives of a company have always been the same. The majority of firms desire to automate level-one assistance. In a recent conversation with Moneycontrol, Mathrubootham stated that generative AI is enabling the automation of many more use cases.

A total of 13 generative AI application extensions and interfaces, powered by ChatGPT, have also been released by Indian SaaS giant Zoho.

“The fusion of ChatGPT’s generative AI with our home-grown AI features will provide users with a more intuitive, efficient, and secure experience, reflecting Zoho’s deep R&D-first culture,” said Ramprakash Ramamoorthy, director of AI research, Zoho Corporation.

The IT industry is not new to AI or its use cases, but since the release of OpenAI’s ChatGPT in November, generative and conversational AI have been receiving a lot of attention.

Conversational AI refers to technologies like chatbots or virtual agents that users may communicate with. Generative AI is a subset of AI technology that can create many sorts of content, including text, pictures, audio, and synthetic data.

It has become a buzzword and has drawn industry heavyweights like SAP, Salesforce, and IBM to investigate this market. Indian SaaS and internet companies are now boarding the generative AI bandwagon, whereas the West has been quick to adopt the same.

“SaaS companies building in the chat space have a lot of scope to explore generative AI; the companies will also have a huge customer base to get into this,” Arvind Parthiban, the founder of SuperOps AI, an AI-driven MSP (managed-service provider, or a third-party remote IT infrastructure manager) software, told Moneycontrol.

Companies like Mad Street Den and ManageEngine are also creating more modern, customer-focused AI technologies.

In recent research, ManageEngine, the enterprise IT management business of Zoho Corporation, advised IT teams to give up siloed management in favour of sophisticated AI- and machine learning-powered observability in order to stay competitive.

“Despite the difficulties, observability and AIOps (artificial intelligence for IT operations) have significant advantages in providing better customer experiences and promoting business success. Companies are likely to invest in these technologies as long as customer experience initiatives are prioritised by them. ITOps (IT operations) teams will be empowered by our top-notch solutions; we are dedicated to helping them on their path, said Mathivanan Venkatachalam, vice president of ManageEngine.

Many firms are under pressure from investors to develop products in the field of generative AI or use ChatGPT. Many companies today are trying to raise money by promising to use AI to create remarkable products, according to a founder of a SaaS business who declined to give his name.

Investors think that businesses that create their own playbook to capitalise on the AI wave will succeed nonetheless.

According to Thiyagarajan Maruthavanan, general partner of SaaS-focused venture capital firm Upekkha, “most people are underestimating the impacts of AI, and Indian SaaS companies are starting to realise that there is no playbook to build on an existing AI but to build something on their very own.”

Indian SaaS businesses that use AI might generate $500 billion in market value by 2030, according to a recent analysis by Stellaris Venture Partners and the International Finance Corporation, a division of the World Bank Group.

By 2030, India’s AI opportunity might generate 3.6 million new indirect jobs in addition to more than 900,000 new white-collar positions. According to the paper titled “AI-Enabled SaaS: The Next Frontier for Global SaaS Startups from India,” by 2030, infrastructure, applications, and services could generate almost $900 billion in revenue globally.

Demand for AI talent is rising

On condition of anonymity, the chief human resource officer of a SaaS company said, “The demand for AI talent is increasing, and the existing engineering talents are also getting trained in several AI-related skills like data analysis, data science, machine learning, and specific areas like natural language processing, image and voice recognition tools, and more.”

Numerous skills could become obsolete, and not only in India; there is a global talent need for AI that needs to be quickly filled.

Companies are willing to pay a lot for certain AI-related talent, despite the fact that layoffs are occurring on one side of the market. This section is popular. The CHRO of the aforementioned SaaS company claimed that IITs and IIMs (the Indian Institutes of Technology and Management) had already noticed this tendency.

Recognising the dangers

The rapid development of AI, in particular the recently created conversational AI platforms ChatGPT and GPT4, is posing a danger to the workforce, particularly programmers, according to Sridhar Vembu, CEO and co-founder of Zoho, who stated this in a press conference last month.

In fact, Vembu, Rajiv Kumar, a former vice chairman of NITI Aayog, and Sharad Sharma, co-founder of the iSPIRT Foundation (an advocacy platform for the software industry), presented the government with a proposal that calls for the establishment of an AI policy that prioritises openness and transparency.

In addition to the risk that developer employment may be eliminated as AI, particularly generative AI, develops, many founders and investors also highlight the issue of data security.

“Today, everyone is developing AI-powered solutions that make use of ChatGPT. Small businesses may be concerned now about data and privacy, but as they grow, these are very important factors to consider. According to a top executive from a SaaS unicorn who spoke on the condition of anonymity, “generative AI is currently in its infancy stage, and sharing data with these platforms may take away some parts of confidentiality that every founder should be wary of.”

Investors are still leery of startups integrating AI

“Both established and emerging companies promise to integrate chatGPT to create new solutions. Right now, it’s difficult to predict a winner. According to Bala Srinivasa, co-founder and managing director of Arkam Ventures, “one in thirty new companies may create something truly unique.”

“Sales facilitation A significant area for AI integration is SaaS. However, every day a new business model incorporating ChatGPT and AI integration emerges within this market. In our conversations with customers and industry professionals, we like to seek out firms that can present ideas that are truly disruptive, Srinivasa continued.

According to Maruthavanan of Upekkha, the first question a creator of an AI firm should consider is whether they are creating applications on top of large language models (LLM) or the LLM infrastructure itself in the post-ChatGPT era.

“Generative AI is the topic of recent excitement in AI. Generative essentially refers to speculation. It seems like the web is being memorised by machines, he remarked.

“While 90% of businesses are merely riding the hype, the 10% that will actually comprehend the effects and develop products will genuinely become the world’s next Amazon or Uber.” I evaluate businesses based on whether they are addressing infrastructure or application-related issues, he continued.