When conversations about SaaS have been misinterpreted as Microsoft CEO Satya Nadella suggesting that software program as a service (SaaS) was dying, the Indian SaaS market remained unfazed. Freshworks, certainly one of India’s main SaaS gamers, is now eyeing a significant milestone of reaching $1 billion in annual income by 2026, with AI enjoying a central function in driving its progress.
Not like conventional issues surrounding the potential disruption of SaaS by AI, Freshworks views AI as a “tailwind”, propelling the business ahead by enhancing buyer expertise, bettering operational effectivity, and producing tangible enterprise worth.
“AI has been a really, very robust tailwind,” Shelton Rego, vice chairman and managing director at Freshworks, stated in an unique interplay with AIM. He emphasised this shift, noting that AI essentially adjustments how companies work together with software program.
“Clients don’t care about which cloud platform they’re utilizing…What they care about is worth, use circumstances, ROI, and time to market,” Rego stated, including that the actual worth lies not within the infrastructure behind AI however in its functions.
The AI-Powered Technique
Freshworks is betting on AI throughout three key areas, particularly operational effectivity, worker expertise, and buyer expertise—all geared toward accelerating its income progress.
One of many largest components in Freshworks’ $1 billion roadmap is the concentrate on lean and scalable progress. Utilizing AI, the corporate goals to streamline operations whereas conserving prices in test.
“We wish to be as operationally environment friendly as attainable. We would like to have the ability to be very lean once we develop.” This ensures that as Freshworks expands its world footprint, it might probably achieve this with out extreme useful resource growth.
Rego believes that AI can be remodeling IT operations, making infrastructure administration extra seamless and proactive, the place AI-driven IT service administration (ITSM) options allow predictive upkeep and quicker concern decision.
The shift in the direction of agentic AI, the place AI brokers autonomously handle complicated IT workflows, is changing into a vital a part of fashionable IT administration and Freshworks.
“In case you have an internet site go down, an agentic workflow can really work out why that web site went down, allocate extra server assets, after which submit an RCA to the Web site Reliability Engineer,” Rego defined. This strategy permits IT groups to concentrate on oversight slightly than always troubleshooting issues.
Freshworks launched its model of an agentic workforce, named Freddy AI, greater than a 12 months in the past. The autonomous service agent was designed for seamless deployment to enhance each buyer and worker experiences.
“Now we have roughly 2,200 co-pilot prospects now. The truth is, out of these 2,200, 500 of them have been signed up in This autumn. So the joy is actual,” Rego added.
He additionally believes that prospects are much less involved about backend infrastructure and as an alternative concentrate on sensible enterprise outcomes. He emphasised that safety, compliance, scalability, and operational effectivity are a few of their main issues.
India in World SaaS
Notably, on the latest SaaSBoomi Annual 2025 meet, Freshworks founder and chairman Girish Mathrubootham remarked that SaaS, within the present type, is useless, however that the necessity of the hour is to “undertake, evolve, and compete”.
Whereas AI is on the core of Freshworks’ progress technique, its success can be tied to the bigger transformation of India’s SaaS business. The nation has quickly emerged as a world SaaS powerhouse, owing to its huge tech expertise pool and price benefits.
“The most important quantity of GitHub repository posts right now come from India,” Rego identified, highlighting how India is changing into a central hub for AI and software program improvement. With extra Indian corporations embracing digital transformation, SaaS adoption in sectors like fintech, e-commerce, and enterprise IT is accelerating.
India’s favorable regulatory atmosphere has additionally performed a job in boosting SaaS adoption. “The federal government has been form to the fintech business,” Rego famous, pointing to the fast rise of digital-native corporations like Razorpay, PhonePe, and CRED, which have been early adopters of AI-powered SaaS options.
Regardless of the fast progress, the transition to AI-powered SaaS options isn’t with out challenges. Many conventional enterprises in India, particularly in banking and manufacturing, are nonetheless hesitant to undertake AI on account of issues about safety, regulatory compliance, and alter administration.
“Regulated industries…must adjust to quite a lot of laws,” Rego stated. “However we’re seeing a ton of traction in fintech, digital natives, ride-hailing, and e-commerce.” For sectors which can be slower to adapt, the problem lies in shifting legacy programs to fashionable, AI-driven options with out disrupting operations.
One other barrier is regulatory uncertainty. AI innovation usually strikes quicker than laws, creating a spot that companies should navigate. “Innovation will all the time be barely forward of regulation,” Rego identified, making it important for corporations to steadiness compliance and agility.
Trying on the development from on-prem to cloud to AI to now agentic AI, Rego believes that the following wave of AI implementation in SaaS corporations would in all probability be Sky Computing, an idea that abstracts cloud suppliers totally, permitting companies to focus purely on computing wants with out being tied to a single supplier.
“Sooner or later, prospects don’t wish to take these selections,” Rego stated. “I don’t wish to know which supplier I’m utilizing. I wish to be abstracted from that.” The emergence of such improvements may additional revolutionise SaaS, creating new alternatives for progress past the $1 billion mark.
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