How India's new-age SaaS companies are harnessing GenAI to stay ahead

THE CHATGPT MOMENT. That’s how many describe one of the big disruptions in the technology space. For the layperson, this software from OpenAI revealed the power and potential of generative AI software. And while DeepSeek is likely to democratise GenAI, the tech world now talks about a time before ChatGPT and after ChatGPT — much like the way history looks at Before the Common Era (BCE) and Common Era (CE) as reference points.

With the advent of AI and GenAI, there developed a school of thought that believed these technologies would kill businesses in the Software-as-a-Service (SaaS) space. However, around two years since the ChatGPT moment, new-age SaaS companies in India have not just survived, but have taken the lead in adopting AI and GenAI.

And for good reason. Investors and founders agree that AI adds value to their companies. A recent report by AI-focussed venture capital firm SenseAI Ventures points out that enterprise SaaS companies dominated the AI funding space with over 21% of the total investments in 2024, with Al applications & tooling making up for more than 90% of Indian Al funding. The report predicts that in the coming months, AI-first SaaS firms will see their business models evolve from seat-based pricing to outcome-based pricing. That said, firms that have embraced AI/GenAI have already started seeing a considerable difference.

One such company is Mumbai-headquartered Servify, founded in 2015, which designs custom product protection programmes and exchange solutions for devices from brands such as Apple, Samsung, Amazon, HP, and Bose. In the past four years, it has grown its revenue 5x, expanded into 40+ countries, and serves nearly 30 million consumers. Founder & CEO Sreevathsa Prabhakar says the ChatGPT moment accelerated AI adoption. Integrating AI-driven chatbots and virtual assistants for 24x7 personalised support has not only reduced problem resolution time, but also operational costs — a 40% decrease in agent count, and he expects an additional 80% reduction in costs in the coming months. “In the long term, GenAI will play a crucial role in software development, with an increasing portion of our code being AI-generated… Additionally, we plan to introduce predictive maintenance solutions, proactively addressing device issues to enhance customer satisfaction and service quality.”

Growth-stage VC firm Iron Pillar, which is an investor in Servify, has seen GenAI and productivity tools increase revenue and operational leverage within its portfolio companies. “Companies that stay on top of and embed AI innovations into their core products and workflows will do well,” says partner Mohanjit Jolly.

Another example is Hyderabad-based unicorn Darwinbox, which took on big firms like Oracle and SAP in the SaaS HR management space, and has been embedding GenAI into its offering. Chaitanya Peddi, co-founder and product head, says its virtual assistance has seen a big transformation because of the GenAI assistant. “Earlier it was more rule-based, operating within the constraints pre-trained for FAQs. But now it can interpret all the policies and answer all the questions — more like real-time HR support,” he says. In the past three to four years, Darwinbox, founded in 2015, has expanded into the Gulf and North America and expects a 50% year-on-year growth. Darwinbox, which used several foundational models like Llama and ChatGPT for its GenAI capabilities, sees agentic AI — which uses sophisticated reasoning and planning to solve complex, multi-step problems — mature over the next one to two years to help scale the business. Peddi believes that AI won’t be a substitute to SaaS platforms, but augment them, reshaping client expectations. “The expectations of clients from SaaS platforms will perhaps also be [that they evolve into] IaaS — Intelligence-as-a-Service — platforms. They will also expect you to deliver intelligence on the top of your platforms.”

Echoing this sentiment, Anirudh A. Damani, Managing Partner, Artha Venture Fund, sees AI integration in the SaaS space as nothing short of a revolution. “Over 90% of SaaS startups in India now boast some form of AI implementation, and any company that hasn’t is already lagging,” he says. His portfolio companies like Futwork, which helps firms deploy gig workers, has seen AI-powered voice solutions drive efficiencies to escalate only critical interactions to human agents. Similarly, fresher hiring platform Getwork has seen AI reduce the time taken to recruit candidates shrink from weeks to hours or minutes.

Perhaps the biggest impact of GenAI/AI has been on the BFSI space. Online identity verification service and customer onboarding platform Signzy, which counts Stellaris Venture Partners, Arkam Ventures, and Gaja Capital among its investors, has seen that mainstreaming LLMs have a huge impact on its product development processes. Co-founder & CTO Ankur Pandey says that apart from infusing LLMs in the areas of customer end user services, “the bigger benefit… was on internal usage, for example, coding, product documentations, creating help manuals... LLMs help us do with fewer mistakes, and so you can set up a company-wide context and all users benefit from it.” The company, which has 1,000+ BFSI customers globally, says nearly 80% people make active use of AI internally every day, and this has boosted their efficiency by up to 30-35%.

There is also enthusiasm from SaaS-focussed investors. A 2023 report by SaasBoomi (a community of SaaS startup founders) and McKinsey said that India’s SaaS market was on track to grow to $50-70 billion by 2030. With agentic AI now seeing massive adoption, Alok Goyal, partner at Stellaris, says that while classical SaaS was limited to software budgets, agentic AI is tapping into employee salary and outsourcing budgets, which are larger. For investors the value proposition is also much higher. “The total software market today is $600-700 billion annually, whereas salary and outsourcing budgets are ~$5 trillion annually. A big implication, therefore, is that markets which appeared niche earlier, particularly many vertical markets, are viable investment opportunities today. We expect exit sizes to be higher as well,” says Goyal.

While investors initially underestimated the speed of AI adoption, Damani says today the conversation is about agentic AI, and this also has some learnings. “Never underestimate how quickly technology can change the game. Agentic AI isn’t a distant future — it’s happening right now. The winners will be those who embrace it today, not those who wait for tomorrow.”