Software as a Service (SaaS) Market Size, Share, Trends, Growth and Forecast 2032

Software as a Service (SaaS) Industry Prospective:

The global Software as a Service (SaaS) market size was worth around USD 389 billion in 2023 and is predicted to grow to around USD 1122 billion by 2032, with a compound annual growth rate (CAGR) of roughly 12.5% between 2024 and 2032.

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Software as a Service (SaaS) Market: Overview

Software as a Service (SaaS) is described as the application software stored on the cloud and accessed by an internet connection through a web browser, mobile app, or thin client. In this software distribution approach, a cloud provider hosts the programs and makes them available to end users online.

An independent software vendor (ISV) can host the application with a third-party cloud provider. In some circumstances, such as with huge firms like Microsoft, the cloud provider and the software vendor may be the same entity.

Key Insights

• As per the analysis shared by our research analyst, the global Software as a Service (SaaS) market is estimated to grow annually at a CAGR of around 12.5% over the forecast period (2024-2032).
• In terms of revenue, the global Software as a Service (SaaS) market size was valued at around USD 389 billion in 2023 and is projected to reach USD 1122 billion by 2032.
• The cloud-based adoption is expected to drive the Software as a Service (SaaS) market over the forecast period.
• Based on the component, the software segment is expected to hold the largest market share over the forecast period.
• Based on the application, the Customer Relationship Management (CRM) segment is expected to dominate the market expansion over the projected period.
• Based on the deployment, the private segment is expected to capture the largest market share over the projected period.
• Based on the enterprise size, the large enterprise segment dominates the market over the forecast period.
• Based on the industry vertical, the BFSI segment is expected to hold the largest market share over the forecast period.
• Based on region, North America is expected to dominate the market during the forecast period.

Software as a Service (SaaS) Market: Growth Drivers

Increasing demand for smart devices and their applications drives market growth

The fast spread of email, instant messaging programs, and video conferences helps end users demand sophisticated devices. This is supposed to help the market for software-as-a-service grow. People can connect from anywhere other than offices using SaaS applications, so the growing trend toward working from home worldwide is expected to present lots of opportunities for the expansion of the SaaS market in the near future.

Furthermore, the increasing need for companies to outsource their business will help the market expand during the forecast period.

Furthermore, in reaction to the COVID-19 epidemic, many companies chose cloud-based software solutions during the lockdown, therefore benefiting the software-as-a-service sector. Many companies have significantly embraced cloud software platform services, including SaaS, thanks in great part to the government-imposed shutdown.

The growing use of public cloud services during remote work has helped SaaS adoption for the virtual management of work in businesses to be supported. Thus, the notable increase in the worldwide acceptance of outside software solutions during the pandemic helped the Software as a Service market to grow.

Software as a Service (SaaS) Market: Restraints

Rising risk of misconfigurations and data vulnerabilities hinder market growth

In a software as a service platform, professionals save both personal and business critical data, so security becomes a major issue for corporate leaders. Several companies in the sector have found that their primary difficulty is software as a service configuration.

Moreover, security teams' setting of internal application setup is turning into a main obstacle. The misconfigurations cause sensitive data to be lost and cautious application programming interfaces to be neglected, therefore allowing illegal access to sensitive data.

For instance, SaaS misconfigurations accounted for up to 63% of security incidents in April 2022, claims the Cloud Security Alliance (CSA). At least 43% of companies said they had dealt with one or more security problems resulting from improper settings. The main reason for misconfigurations is the ambiguity on changes in the security settings; many departments have access to SaaS security settings. Therefore, the aforementioned stats hamper the SaaS market.

Software as a Service (SaaS) Market: Opportunities

The rising number of applications across the industry offers a lucrative opportunity for market growth

Demand for a single solution to help companies solve business issues drives the expansion of the SaaS market. Companies use SaaS Platform software, which combines a range of applications, including customer relationship management (CRM), business intelligence, supply chain management, and e-commerce systems, and can be customized to meet particular business requirements and deployed across corporate networks on many cloud platforms.

As their organizations grow, companies need business-oriented SaaS solutions created in line with particular business requirements that encapsulate corporate policies, norms, and processes. These programs can help workers reach better degrees of output as the number of mobile users in the office rises. This also facilitates business efficiency and better collaboration and assists them in spotting fresh market prospects for revenue generation.

Software as a Service (SaaS) Market: Challenges

Dependence on internet connectivity poses a major challenge to market expansion

Due to its affordability, scalability, and accessibility, the Software-as-a-Service (SaaS) business has expanded dramatically. However, its significant reliance on internet access is one of its main limitations. Due to the cloud-based nature of SaaS apps, customers must have a reliable internet connection to access software services.

Operations for businesses might be hampered by any network outage. Internet outages that cause downtime can lead to lost productivity and financial losses. Thus, the dependence on internet connectivity poses a major challenge for the Software as a Service (SaaS) market.

Software as a Service (SaaS) Market : Report Scope

Software as a Service (SaaS) Market: Segmentation

The global Software as a Service (SaaS) industry is segmented based on component, application, deployment, enterprise size, industry vertical, and region.

Based on the component, the global Software as a Service (SaaS) market is bifurcated into software and services. The software segment is expected to hold the largest market share over the forecast period. This high share is the result of increased usage across industries, which is fueled by its scalability, cost-effectiveness, and rapid deployment capabilities. Businesses relied on SaaS solutions for important services like CRM, ERP, and HRM, utilizing their ability to interact seamlessly with current systems.

The advent of remote work and digital transformation projects has increased the demand for collaborative and cloud-based solutions. Furthermore, ongoing breakthroughs in AI, machine learning, and analytics built into SaaS applications have increased their appeal by providing actionable insights and automation.

Based on the application, the global Software as a Service industry is bifurcated into Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), human capital management, content, collaboration & communication, BI & Analytics, and others. The Customer Relationship Management (CRM) segment is expected to dominate the market expansion over the projected period. CRM solutions include advanced features like AI-powered analytics, targeted marketing automation, and seamless omnichannel communication, allowing businesses to improve customer experiences and loyalty. The development of e-commerce and digital-first strategies accelerated CRM adoption as businesses sought to manage massive amounts of consumer data efficiently. Integrations with other corporate programs, such as ERP and human resource management systems, also boost workflow efficiency and provide complete insights.

Based on the deployment, the global Software as a Service (SaaS) market is bifurcated into public, private, and hybrid. The private segment is expected to capture the largest market share over the projected period. SaaS application deployment at the network edge combined with private cloud infrastructure can improve speed and lower latency while giving enterprises more control and security over their data.

Based on the enterprise size, the global Software as a Service (SaaS) industry is bifurcated into large enterprises and SMEs. The large enterprises segment dominates the market over the forecast period. SaaS solutions provide major businesses with several advantages, such as flexibility, scalability, and cost-effectiveness. Due to the requirement to manage complex dispersed application environments that span many data centers, cloud providers, and countries, large companies are increasingly implementing multi-cloud and hybrid-cloud strategies.

Based on the industry vertical, the global Software as a Service (SaaS) market is bifurcated into BFSI, Retail and Consumer Goods, Healthcare, Education, Manufacturing, Travel & Hospitality, and Others. The BFSI segment is expected to hold the largest market share over the forecast period. The demand for SaaS-based solutions, including fraud detection, risk management, and payment processing, has increased due to the fintech industry's explosive growth. SaaS is used by insurance businesses for automated underwriting, claims processing, and policy management.

Software as a Service (SaaS) Market: Regional Analysis

North America dominates the market over the projected period

North America is expected to dominate the Software as a Service market during the forecast period. The United States is making a favorable contribution to market revenue growth. One of the main drivers of market expansion is the existence of established market participants.

Additionally, the region's strong IT infrastructure makes it easier to install cloud-based virtual services, which helps it capture a sizable portion of the worldwide SaaS market. The largest market share was also influenced by the availability of several safe internet servers and large investments in cloud infrastructure.

Software as a Service (SaaS) Market: Competitive Analysis

The global Software as a Service (SaaS) market is dominated by players like

• Alibaba Cloud International
• Adobe Inc.
• Microsoft
• IBM Corporation
• Google LLC
• Salesforce Inc.
• Oracle
• SAP SE
• Rackspace Technology Inc.
• VMware Inc.
• IONOS Cloud Inc.
• Cisco Systems Inc.
• Atlassian
• ServiceNow

The global Software as a Service (SaaS) market is segmented as follows:

By Component

•  Software
• Services

By Application

• Customer Relationship Management (CRM)
• Enterprise Resource Planning (ERP)
• Human Capital Management
• Content, Collaboration & Communication
• BI & Analytics
• Others

By Deployment

• Public
• Private
• Hybrid

By Enterprise Size

• Large Enterprises
• SMEs

By Industry Vertical

• BFSI
• Retail And Consumer Goods
• Healthcare
• Education
• Manufacturing
• Travel & Hospitality
• Others

By Region

• North America
  • The U.S.
  • Canada
• Europe
  • France 
  • The UK
  • Spain
  • Germany
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Southeast Asia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • South Africa
  • Rest of Middle East & Africa