In recent years, the software-as-a-service (SaaS) model has surged in popularity, becoming a prominent force in the technology and business landscape. This growth isn't just a passing trend; it signifies a significant shift in how organizations deploy and use software. SaaS has evolved from an option to a vital tool for companies aiming not just to survive but to excel in today's competitive business environment.

In this data-driven exploration of SaaS, we delve into key trends, statistics, and insights that highlight its remarkable impact. From the market size and adoption rates to the industries benefiting most from SaaS solutions, our comprehensive statistics page offers an overview of the current state and promising future of the SaaS industry.

Key Takeaways

  • The global SaaS market size is expected to grow at an impressive CAGR of 19.7%.
  • The United States SaaS industry is on track to reach a market value of $225 billion by 2025.
  • The Asia Pacific SaaS market stands out as the fastest-growing SaaS market worldwide.
  • The global healthcare SaaS market is projected to achieve a substantial CAGR of 19.5%.
  • Companies with over 1000 employees typically use a staggering 150 different SaaS products.
  • The average SaaS expenditure per employee is forecasted to reach $9,600 by the end of 2023.
  • Surprisingly, one out of every three employees at Fortune 500 companies uses unauthorized SaaS applications.
  • In response to the pandemic, 30% of companies worldwide increased their SaaS spending.
  • Collaboration app adoption witnessed a remarkable 176% surge in 2020.
  • There are currently over 8,550 SaaS companies with revenues exceeding $1 million.
  • Astonishingly, 39% of companies, including SaaS companies, do not incorporate agile future planning.
  • SaaS companies typically spend just 6 hours on formulating a pricing strategy.
  • Microsoft maintains its top position among cloud vendors in terms of revenue, with an impressive figure of $28.5 billion.

SaaS Market Size and Growth

The SaaS industry has evolved into an immense behemoth with far-reaching impacts, and it is just beginning its upward trajectory. In the years ahead, we anticipate a wave of transformative developments and innovations that will further redefine the landscape of how businesses operate, collaborate, and compete in the globalized digital economy. In this section, we will explore the expansive scope of the SaaS industry's current status and its projected growth path in the upcoming years.

  • The global market size for SaaS services was estimated to be $257.47 billion in 2022. Over the period from 2023 to 2030, it is anticipated to exhibit a compound annual growth rate (CAGR) of 19.7%, resulting in an impressive addition of $1,298.92 billion to its total value. Key factors contributing to this growth include the adoption of public and hybrid cloud-based solutions, the integration of SaaS with other technologies, and the utilization of centralized data-driven analytics.
  • In 2022, the global SaaS market generated a staggering $167 billion in revenue. This impressive figure constituted approximately two-thirds of the total revenue in the public cloud services market.
  • The United States is poised to spearhead the SaaS industry revolution, with an anticipated market value of $225 billion by 2025. This projected figure significantly outpaces other countries. Presently, the US SaaS industry boasts a market value exceeding $108 billion.
  • By 2030, India's SaaS industry is poised to secure a substantial share, ranging from 4% to 6%, of the global SaaS market, reaching a market value of $50 billion to $70 billion. This growth rate is nearly double that of the global SaaS market.
  • The Asia Pacific SaaS market is set for rapid growth with a projected CAGR of 16.1% over the next decade, making it the fastest-growing region in the global SaaS market. This growth is primarily driven by China and India, where there is a rising demand for outsourced cloud-based software services. Additionally, the increasing number of Small and Medium-sized Enterprises (SMEs) outsourcing various functions in the region is also a significant contributing factor to this positive trend.
  • In 2023, public SaaS companies had a median growth rate of 22%, while private SaaS companies recorded a median growth rate of 35% during the same year.
  • Predictions suggest that by 2026, public cloud spending will surpass 45% of total enterprise IT expenditure. This represents a significant rise from the less than 17% recorded in 2021 when end-users collectively spent $396 billion on public cloud services.

Key Industry Segments

The SaaS industry encompasses diverse segments, each leveraging its products to enhance and streamline their operations. Ranging from customer relationship management (CRM) software empowering sales and marketing teams to analytics platforms aiding data-driven decision-making, the breadth of SaaS applications caters to the distinct requirements of various sectors and functions. This section aims to illustrate the growth of each segment and provide accompanying projections for the upcoming years.

  • By 2026, the manufacturing SaaS market is anticipated to exceed $19 billion in value. An increasing number of manufacturers are now embracing cloud-based solutions for various aspects of their operations, including supply chain management, inventory control, and production planning. This shift is a significant driver behind the projected growth in the industry.
  • The global web and video conferencing SaaS market is expected to reach $7 billion by 2026. This is mainly driven by the increased demand for web and conferencing applications, fueled by the widespread adoption of remote work practices. Technological advancements, such as the Internet of Things (IoT), cloud computing, artificial intelligence (AI), and improved video compression, are also contributing significantly to this expansion.
  • In 2020, the global healthcare SaaS market was valued at $12.5 billion, and it is projected to grow at a CAGR of 19.5% from 2021 to 2028. The rapid digitalization of the healthcare sector, marked by the increased adoption of electronic health records and telehealth solutions, drives this growth.
  • Between 2022 and 2027, the global CRM SaaS market is poised for rapid growth, with a projected CAGR of 13.43%, reaching a momentum of $59.4 billion. Main drivers for this are factors such as the rising adoption of SaaS CRM among small and medium-sized enterprises, the increasing prevalence of cloud-based solutions, and a heightened focus on improving customer engagement and satisfaction.
  • From 2021 to 2028, the EdTech SaaS market is expected to grow at a CAGR of 19.1%, driven by rising demand for virtual learning platforms and educational content.
  • The growing need for streamlined HR management systems is propelling the SaaS HR market, with a projected CAGR of 15.8% from 2021 to 2028. This expansion is driven not just by improved management systems but also by the demand for effective talent acquisition tools and advanced analytics. These elements work together to boost workforce productivity and improve the overall employee experience.
  • The global property management SaaS industry is projected to experience a CAGR of 15.5% from 2021 to 2028. This growth is fueled by rising demand for automated rental management, streamlined property operations, and improved tenant experiences.

Key SaaS Industry Insights for Future Projections

Highlighting key industry trends in the SaaS sphere offers a comprehensive overview of its growth and future potential. Analyzing these shifts provides valuable insights into the trajectory of the SaaS industry, shedding light on the opportunities and challenges it may face in the years ahead.

  • As of 2023, there are over 8,550 SaaS companies generating revenue exceeding $1 million.
  • In 2023, B2B private SaaS companies with an annual recurring revenue of less than $1 million reported the highest median growth rate, coming in at 51%. Surprisingly, the largest B2B private SaaS companies, boasting ARR figures exceeding $20 million, exhibited the lowest median growth rate, standing at just 27%.
  • In 2022, a survey of business leaders and finance professionals across different industries, including SaaS, uncovered concerning trends. Notably, 39% of respondents didn't incorporate agile planning into their future preparedness strategy. Moreover, a significant 41% didn't utilize organizational data for decision-making. This extended to crucial data categories like sales, employee, and customer data, with many neglecting these valuable insights for decision-making.
  • The SaaS industry makes up 0.15% of the global economy and contributes to 2% of the total revenue of Fortune 500 companies.
  • Industry thought leaders and influencers predict that over the next five years, a significant shift will occur, with approximately 95% of workloads transitioning to the cloud.
  • It is projected that by the end of 2023, nearly all companies will have adopted one or more SaaS solutions.
  • As of 2023, there are approximately 30,000 SaaS companies globally. Around 15,000 of these operate within the marketing sector.

Effects of COVID on the SaaS Industry

The COVID-19 pandemic had a profound impact on the SaaS industry. It reshaped how businesses operate globally and accelerated the adoption of cloud-based software solutions. The rise of remote work, social distancing measures, and shifts in consumer behavior positioned the SaaS sector as a key driver of the post-pandemic recovery, highlighting society's resilience.

  • In May 2020, the usage of SaaS tools increased by 17% as remote working practices and lockdown restrictions persisted. This growth trend continued into June 2020, with SaaS tool usage further escalating by 22%, accompanied by a 16% increase in SaaS spending.
  • In 2021, 30% of companies worldwide augmented their SaaS spending in response to the pandemic. In the United States and Europe, companies boosted their SaaS spending by approximately 57%.
  • It is predicted that virtual healthcare could constitute roughly $250 billion, a substantial increase from the initial estimate of $3 billion, in health insurance spending in the US. The COVID-19 pandemic ushered in the era of telehealth, which proved to be incredibly convenient, especially during lockdowns. People could consult with healthcare professionals from the comfort of their homes, eliminating the need to spend hours waiting in a doctor's office.
  • During the first year of the COVID-19 pandemic, from 2019 to 2020, the average growth rate of SaaS portfolios was 62%. This growth rate saw an additional increase of 28% during the second year of the COVID-19 pandemic, spanning from 2020 to 2021.
  • The outbreak of the pandemic prompted businesses worldwide to embrace Zoom as a solution for staying connected with both customers and employees. During this period, Zoom experienced a surge in popularity, with 300 million daily meeting participants worldwide. To put this into perspective, just six months prior, at the end of 2019, Zoom had only 10 million meeting participants.
  • In 2020, there was a remarkable 176% surge in the adoption of collaboration apps on enterprise devices as a response to the pandemic.

SaaS Business Usage

Companies of all sizes are turning to SaaS products to enhance their operations. This includes small startups aiming to scale efficiently without the burden of extensive IT infrastructure, as well as large enterprises looking to optimize their global workflows and increase agility. The widespread adoption of SaaS reflects its versatility and scalability, making it adaptable to the evolving needs of businesses in today's fast-paced digital landscape.

However, the extensive use of SaaS doesn't always translate into productive use. To effectively implement and utilize SaaS applications, careful planning, training, and alignment with a company's strategic objectives are essential. In this section, we'll examine data that illustrates the prevalence of SaaS usage in companies of various sizes and the extent to which it is used productively.

  • On average, companies with over 1000 employees rely on approximately 150 SaaS products for their day-to-day operations. In contrast, companies with 50 to 100 employees use around 24 SaaS applications.
  • 70% of the software utilized by companies consists of SaaS applications. This percentage has seen consistent growth year after year, rising from an average of 16 apps in 2017 to a staggering 80 SaaS apps in 2022. Projections indicate that SaaS software is expected to comprise 85% of the software employed by organizations in the near future.
  • By the end of 2023, the average SaaS expenditure per employee is projected to reach $9,600. Small and medium-sized enterprises (SMEs) allocate an average of $11,196 per employee, while the mid-market segment budgets approximately $10,045 per employee. In contrast, the enterprise segment tends to spend a relatively lower average of $7,492 per employee.
  • In 2023, more than 50% of SaaS licenses remain inactive for a period exceeding 90 days. On average, only 47% of SaaS licenses see active usage.
  • In 2020, the largest user group of cloud SaaS consisted of software engineers, making up 20% of the surveyed SaaS users. They were followed by technical leads and architects, who accounted for 11%.
  • One in every three employees at Fortune 100 companies uses unauthorized SaaS products that have not been approved by their IT departments.
  • In 2022, a noteworthy 53% of enterprise SaaS applications were not under the direct management of IT. In this context, this means a lack of oversight in areas such as renewal dates, licenses, application usage, and security and compliance.

Pricing Model Differences and Trends

Pricing is a critical factor for both businesses and individuals when considering the adoption of SaaS products in their daily operations. It significantly influences the overall cost-effectiveness and practicality of incorporating these software solutions into their workflows. Examining the thoroughness with which SaaS companies develop their pricing models offers valuable insights into how well they understand and cater to their target audience's requirements and preferences. In this section, we delve into the pricing preferences of SaaS companies and explore the level of deliberation they invest in determining their final pricing strategies.

  • The most commonly preferred billing period for SaaS products are yearly plans. However, the average contract length typically extends to 1.3 years.
  • In 2019, SaaS companies with month-to-month contracts experienced a 14% churn rate. On the other hand, those with 1 to 1.5-year contracts had a slightly higher churn rate of 15%.
  • 56% of SaaS companies do not provide a free trial. Conversely, 44% offer a free online trial, 41% provide a free 30-day trial, and 18% extend a complimentary two-week trial option.
  • The percentage of SaaS companies adopting a value-based pricing approach stands at 39%. Those utilizing a usage-based pricing model are slightly lower at 38%.
  • On average, SaaS companies devote only 6 hours to the process of formulating their pricing strategy.
  • On average, 79% of SaaS companies update their pricing annually. This practice is consistent among both late-stage and early-stage companies.
  • Seat-based pricing eclipses usage-based pricing as the prevailing pricing model, with approximately 38% of companies opting for this approach. Seat-based pricing, often referred to as per-user pricing, is a model in which the cost is determined by the number of users or "seats" with access to the product. On the other hand, usage-based pricing is a structure where users pay for products or services based on their consumption or usage.
  • Remarkably, a mere 6% of SaaS companies have conducted pricing research to understand buyer needs and gauge willingness to pay. In contrast, only 45% reported having undertaken basic market research, leaving a substantial 48% who have yet to delve into any form of pricing research.
  • In today's SaaS landscape, there is a shift away from offering discounts. Approximately 29% of companies have significantly reduced their discounting practices, while another 39% only provide occasional discounts.

Notable Players in the SaaS Industry

The SaaS industry encompasses a broad spectrum of companies, spanning from nimble startups with pioneering solutions to established enterprises commanding significant market presence and revenue. Within this dynamic landscape, there exist industry giants who play a pivotal role in shaping the sector's trajectory. These leading companies often serve as trailblazers, setting new standards, driving innovation, and reshaping customer expectations. Beyond their considerable market share, these industry leaders wield significant influence, guiding the direction and evolution of the entire SaaS landscape.

  • Zoom achieved an impressive 148% revenue growth in the first quarter of 2020, outpacing other major video conferencing SaaS vendors, who reported comparatively lower revenues. Their revenue surged from $90 million in the first quarter of 2019 to a remarkable $225 million in the corresponding period of 2020.
  • In terms of B2B CRM revenue, the market leader in 2021 was Visma, generating an impressive $2.2 billion. Following closely behind, Qualtrics reported $763 million, with Zoho not far behind at $500 million.
  • Salesforce currently boasts a workforce of around 73,000 employees. This marks a significant 29.92% increase from its 2021 employee count of 56,606.
  • As of March 2023, Microsoft holds the top position among cloud vendors in terms of revenue, generating an impressive $28.5 billion. Following closely behind is Salesforce, with $8.4 billion in revenue, and Google Cloud, which has generated $7.5 billion.
  • In 2022, Adobe secured its position as the leading publicly-traded SaaS company on the US stock exchange in terms of market capitalization. The organization amassed an impressive $170 billion in market capital, surpassing other US SaaS companies by $6.7 billion.
  • As of 2021, the five largest SaaS companies collectively held a market share of 33.3%. These companies are Microsoft (10.9%), Salesforce (9.9%), SAP (4.5%), Oracle (3.6%), and Google (3.4%).
  • Among the major SaaS companies, Salesforce boasts the highest market capitalization, with a staggering $190.1 billion. It is closely followed by Adobe, valued at $171.9 billion, and Intuit Inc., with a market capitalization of $120.5 billion.


What is SaaS in simple terms?
SaaS, short for 'Software as a Service,' represents a transformative approach to software delivery and management. In simple terms, SaaS can be described as a method of delivering software applications and services over the internet, as opposed to the conventional installation on individual computers or local servers.

Is the SaaS industry growing?
Yes, and at a remarkable pace. The global SaaS market is poised for substantial growth, projected to soar from $215.1 billion in 2021 to an astounding $1,298.92 billion by 2030. This signifies an impressive compound annual growth rate of 19.7% expected between 2023 and 2030.

What is the biggest market for SaaS?
The United States dominates the global SaaS market, commanding an impressive 70% share.

What are the biggest companies in SaaS?
The five largest companies in the SaaS industry are Salesforce, Cisco Systems, Oracle Corporation, Alphabet Inc., and Microsoft Corporation.

Why do most SaaS startups fail?
Numerous factors contribute to the failure of SaaS startups. The elevated failure rate can be attributed to challenges such as poor scalability, inadequate funding, intensifying competition, and insufficient marketing efforts. Furthermore, the absence of a well-defined business and financial plan frequently plays a pivotal role in these failures.

How much money do you need for a SaaS startup?
Some SaaS startup companies have been founded without any initial capital investment. If you have the time and technical skills, you can develop a SaaS product with minimal expenses. A prime example is the SaaS company Envoy. Its founder and CEO, Larry Gideon, created the Minimum Viable Product (MVP) for Envoy without any initial financial backing. He independently handled the entire development process during his free time, making use of free software development tools.

On the other hand, there are SaaS startups that have been launched with substantial capital, ranging from $100,000 to $1 million.

What is the growth rate of SaaS startups?
In 2023, the growth rates of top-quartile SaaS companies, with ARR ranging from $1 million to $30 million, have reached a point of stability. Conversely, the growth rate for early-stage startups peaked in 2021 and has since declined by over 50%.