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Navigating the Deep Tech Talent Shortage: Challenges and Opportunities for India's B2B SaaS Startups

Navigating the Deep Tech Talent Shortage: Challenges and Opportunities for India's B2B SaaS Startups


India's enterprise Software-as-a-Service (SaaS) sector is on a trajectory of rapid growth, revolutionizing industries with innovative solutions. 

However, this impressive journey is met with a hurdle that might impede its potential: a shortage of deep tech talent. 

A recent report by Nasscom in partnership with EY sheds light on this concern, highlighting how expertise gaps in areas like Artificial Intelligence (AI), Machine Learning (ML), and advanced computing might hinder the expansion of India's B2B SaaS firms.

Titled 'Breaking Ground: Unraveling the deep tech potential in Indian B2B SaaS,' the report underlines that deep tech, though promising, demands specialized proficiency. Yet, the challenge lies in sourcing and retaining skilled professionals due to soaring demand and limited supply. 

This scarcity of talent, coupled with inadequate deep tech infrastructure, is a growing concern that might affect the sector's growth.

The findings are a result of face-to-face interviews with chief experience officers (CXOs) of leading SaaS firms. 

Around 80 percent of these CXOs expressed apprehension about the talent gap in deep tech and its potential repercussions on growth. 

This concern echoes the sentiment shared by venture capital firm Accel's Prashanth Prakash, who recently highlighted the absence of a substantial ecosystem for deep tech, including AI, ML, and biotechnology, in India.

Among the various facets of deep technology, Artificial Intelligence and Machine Learning stand out as the most leveraged, accounting for approximately 54 percent of use cases. 

Big data or descriptive analytics follows at 39 percent, with intelligent automation trailing at 7 percent.

The report suggests that attracting and retaining talent requires creating a stimulating work environment and providing incentives that foster a culture of innovation. 

The deep tech talent shortage is not the sole concern; CXOs also emphasized the dearth of patient capital—funding that endures extended periods without immediate returns—as another potential obstacle to growth.

Balancing investors' expectations with the need for sustained financial support becomes crucial for deep tech startups. 

Despite these challenges, the report underscores the substantial potential of deep tech-focused B2B SaaS firms to unlock an Annual Recurring Revenue Compound Annual Growth Rate (ARR CAGR) of 30-50 percent.

Moreover, the report reveals that 25 percent of Indian B2B SaaS companies analyzed demonstrated a focus on innovative deep tech. 

These companies have collectively filed over 1,400 patents in the past five years, compared to just 574 patent filings in the preceding decade. This trend exemplifies the growing inclination towards leveraging intellectual property and innovation to drive growth.

Sangeeta Gupta, Senior Vice President and Chief Strategy Officer at Nasscom, emphasized that as India advances in this sector, prioritizing innovative deep tech and concurrently addressing growth barriers are pivotal to establishing a globally competitive and attractive deep tech-led B2B SaaS destination.

Therefore, India's B2B SaaS sector holds tremendous potential for transformative growth. 

However, tackling the deep tech talent shortage, fostering a conducive work environment, addressing funding challenges, and nurturing a culture of invention will be critical to realizing this potential and positioning India as a dominant player in the global deep tech landscape.

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