Everything as a Service (XaaS) Market: Will SaaS decline in 2023?

1
Everything as a Service (XaaS) Market Will SaaS
decline in 2023?
Everything as a Service (XaaS) is an
umbrella term that refers to the service
offerings of anything as needed and financed
over the internet. It encompasses technologies,
tools, and products vendors use to deliver their
service over a network. According to Inkwood
Research, the global Everything as a Service
(XaaS) market is expected to register a CAGR of
20.77 and garner a revenue of 3958.99 billion
by 2032. One of our major findings with regard
to the XaaS market is the declining sales of
SaaS- based services and software during the
forecast period, 2023-2032.
Accordingly, this blog attempts to understand the
SaaS landscape as of 2023.
2
The SaaS Explosion Businesses are adopting
Software as a Service (SaaS) applications at an
astonishing pace. As per BetterCloud,
IT-sanctioned SaaS apps have increased
ten times since 2015. Moreover, according
to the same source, 85 of business apps will be
SaaS-based. 2020 was a pivotal year for the SaaS
market. The global pandemic forced companies to
move from office-based to virtual teams. In this
regard, SaaS services and applications were
crucial in keeping businesses operational and
workers employed during the pandemic. Thus, it
is safe to say that the SaaS explosion has been
real. In addition, it has opened up new buyer
segments (for instance, small and midsized
firms), attributed to the Operational expenditure
(OpEx)-based subscription pricing.
Recession Clouds loom over SaaS As per
evaluations, SaaS enterprises will be the first
causalities to the economic slump, given the vast
outreach of the SaaS market and the plethora of
industries it serves. Besides, most companies in
the SaaS industry have never encountered a
recession. The recession fears in the United
States are attributed to the Russia-Ukraine war
and its impact on supply chains, the US Federal
Reserves aggressive interest rate hikes, and
runaway inflation. Accordingly, there are
concerns about expenditure on software,
which would be unpleasant for SaaS
companies. Moreover, prominent
SaaS firms announced
layoffs, including Chargebee, Freshworks, and
SalesForce.
In a LinkedIn post, Krish Subramanian,
Chargebees cofounder, wrote, This
difficult decision was driven by external market
forces as well as our need to address the
operational
debt we have accumulated in the last few years.
(Source)
3
Whereas other companies adopted stringent
cost-cutting measures like reduced marketing
spending. A direct and immediate impact of the
recent tech layoffs with regard to the
SaaS industry is the declining seat
licenses. More vigilance regarding
safeguarding business-critical SaaS
applications in a down economy is
warranted for an enterprise subscribed to
SaaS services. Another major challenge the
SaaS industry faces is the increasing
customer acquisition costs (CAC).
Additionally, given the budget constraints,
several enterprises are cutting back on
their expenditure on SaaS products and services.
This has further decreased the demand for SaaS
products, making it difficult for SaaS companies
to acquire new customers. Moreover, COVID-19
influenced the demand for productivity and
remote SaaS products like Twilio and Zoom. At
the same time, post-COVID has rendered lower
dividends for SaaS firms, with several clients no
longer requiring their services.

• What does the future hold for SaaS?
• While several founders and investors opine
  that 2023 will be rough for SaaS companies,
  certain trends are projected to govern the SaaS
  landscape.
• These include
• Big Bets on Predictive AI
• Predictive AI found use cases in ChatBots and
  HRTech, including climate change analysis.
• As a result, it is gaining the attention of many
  investors.
• According to Krish Subramanian, Chargebee, I
  think every company will have to build a
  predictive as well as embedded AI experience into
  their platforms and it is going to become

table stakes through 2023. (Source)
4

• Deep Technology is a Favorite Bet
• The top SaaS companies are betting on deep
  tech and amplifying their investments. The
• products built to enhance revenues, minimize
  costs, and improve operational efficiencies are
  slated to do well.
• As per Zohos Praval Singh, The focus is always
  on building products from the ground up instead
  of acquiring them, and investing heavily in RD
  to gain the know-how and develop deep-tech
  capabilities like audio-video conferencing and AI
  frameworks. (Source)
• Data Security, Cloud Infrastructure, and
  Developer Tools will fare High
• A large number of businesses are moving to the
  cloud. However, even a small-scale lapse
• can overturn the biggest brands. As a result,
  cybersecurity has become a non-negotiable for
  organizations.
• According to Singh (Zoho), Data privacy and
  protection will remain critical and see a larger
  degree of technology investment. This may also
  push larger companies, especially in certain
  sectors, to consider on-premises cloud
  setups in order to retain more control
  over the software they deploy and their data.
  (Source)

Future of SaaS Innovations will hasten
Resilience Recessions foster real innovations.
For instance, Microsoft was founded during a
recession. So were payment
giants Square and Venmo. Also, WhatsApp,
Slack, Airbnb, and Uber were products of the
recession. As a result, companies with real
innovations have the potential to survive the
recession onslaught. Similarly, given the budget
constraints, the primary focus will be on SaaS
applications that yield maximum value and minimal
complexity alongside improving the consumer
experience. In essence, product enhancements are
the
way to go for SaaS businesses to survive the down
economy.
5
Inkwood Researchs segmentation analysis of
the global Everything as a Service (XaaS)
market includes type, business type, and
organization size. The type segment
includes UCaaS, DaaS, SaaS, AaaS, PaaS, and IaaS.
As per our evaluations, SaaS had the
largest revenue share in 2022 (31.26).
However, this blog was an attempt to
understand the current landscape and future
prospects of SaaS.
By Akhil Nair FAQs
Which is the fastest-growing business type in the
global Everything as a Service (XaaS)
market? Business-to-Consumer (B2C) is the
fastest-growing business type in the global
Everything as a Service market.
Which country has lucrative prospects with regard
to Everything as a Service (XaaS)? India has
lucrative prospects with regard to Everything as
a Service (XaaS).