Business as a Service Market

Business as a Service Market Outlook (2022-2032)

[342 Pages Report] The Business as a Service (BaaS) market is expected to grow at a mammoth CAGR of 20.2% during the forecast period. The valuation of this market stands at US$ 170800 million as on 2022, and it is anticipated to be valued at US$ 1074100 million in 2032.

The urgency to implement new technologies to drive the fundamentally different ways to drive a business through the proper implementation of data-driven communication, coupled with many other factors, are expected to surge the demand for Business as a Service.

If we view the business as a Service (BaaS) as a very basic form of business service, it is like giving the business the much-required head start. Businesses can promote their products/services through A2P messaging, wherein the messages will be sent through an application rather than a person, and the message can be related to marketing communications, notifications, etc. From the very basic level itself, the sky is the limit for business opportunities.

The applications of business as a Service are not only limited to messaging. It provides a variety of applications like democratising business functions, seamless access to core services amongst the verticals etc.

Additionally, business management becomes much easier with the implementation of business as a Service. Being an application of the Everything as a Service (XaaS) model, it paves the way for businesses to be reasonable, i.e., payment as per usage. Such factors might very well increase the demand for Business as a Service.

Statistical Insights Comparing the Past vs Future Performance

When we compare the historical CAGR (2017-21) with the CAGR of the forecast period, it gives us a glimpse of the fact that the market might grow in the coming times. The historical CAGR was 18.26%, and the CAGR for the forecast period is anticipated to be 20.2%. Though there is not much difference, with businesses continuing to focus more on the online mode and technological upgradations, the figures do present a gist of what the Business as a Service (BaaS) market is capable of achieving going ahead.

Moreover, by comparing the valuation of the market in 2017, which was US$ 73300 million, with the valuation of 2022, which is US$ 170800 million, and the anticipated valuation of US$ 1074100 million, we can notice that the market is expected to grow by leaps and bounds.

Top Dynamics Strengthening Growth of Business as a Service Market

Service availability on the spot: We are living in the times of instant gratification. Verticals across the businesses want to immediately access the services which is delivered by someone else. The application of Business as a Service helps us achieve this using the cloud technology.

Democratisation of functions: One of the biggest benefits of using this service is that the application of cloud technology is democratising the functionalities. This promotes the concept of crowdsourcing within the organisation, as a result of which only the best practices are applied across departments. This is anticipated to increase the demand for Business as a Service.

This also helps the enterprises to revamp the business processes and develop their existing products/services.

Flexibility: It is essential to understand that companies which have been operating for quite a long time cannot change their conventional systems on an immediate basis. However, with the usage of Business as a Service (BaaS), the companies can either rope in or discard what they wish to spontaneously on a real-time basis.

Parting ways with expensive ownership: The Business as a Service has even moved beyond the business cloud computing model. Now the enterprises can convert any product to a service offering. This allows the companies to invest only at the required places, instead of dealing with expensive ownership, and dealing only with variable costs.

Tracking performance within seconds: With so many crucial metrics available for tracking the performance of a business, the application of Business as a Service ensures that every possible metric associated with a business can be tracked almost every second. This as well might surge the demand for Business as a Service.

Applying the apt model: The Business as a Service model experiments with multiple ideas, tests them, and finally implements the one that offers the best result during the simulation stage.

Sudip Saha

Principal Consultant

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Challenges Limiting the Business as a Service Market

Difficulty in capturing full value: Capturing the full value while adopting Business as a Service requires us to follow multi-year journey which may include challenges like evolving supply chain management, financial models etc. Progress towards the new business model should be made only after careful analysis, else the business might have to face something undesirable.

Complicated Process: The application of this service is different for different kinds of companies. The intensity of complication varies depending on the product/service. Therefore, it is critical to understand the applicability of Business as a Service model to a given process, before making any decision.

Valid only for subscription-based model: Undoubtedly, customer delight is something which companies in the current times aim for. However, if the offerings perform below customer expectations, the customers would certainly not renew the subscription. This might have a negative impact on the demand for Business as a Service.

Opportunities for Business as a Service Market

Growth of E-Commerce market: Based on the market research, the E-Commerce industry is expected to grow at a CAGR of around 15% during the forecast period.

The usage of Business as a Service in E-Commerce would allow companies to launch a multi-channel direct-to-consumer sales offering quickly. For this, the enterprises do not have to manufacture anything in-house. Everything is available, including E-Commerce platform, analytics etc.

Growth of cloud computing market: Based on the market research, the cloud computing market is expected to grow at a CAGR of 16.3% through 2032.

As the Business as a Service market to large extend depends on the cloud computing technology for data storage, the Business as a Service market share might increase in the future.

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Sales as a Service to Be a Key Channel for Business as a Service

The Sales as a Service aspect of Business as a Service model is quite crucial in the current businesses. The idea of using Sales as a Service is to expand the market share as soon as possible.

Moreover, the sales quotas and commissions must be aligned to motivate the performance of the sales team. This kind of approach makes use of new types of sellers with different skills. Therefore, the sales team has to be retrained to fit into relatively newer roles. 

Comparative View of Business as a Service Market

Business as a Service Market :

Business Process as a Service Market:

Software as a Service Market:

Growth of certain types of industries like E-Commerce, BFSI etc. are expected to fuel the growth of these markets. Apart from that affordable IT services as well are driving the demand for these sectors.

Consequently, governments and various authorities have started investing in these technologies.

Segment Wise Outlook

By Service Type

By service type, the Software as a Service (SaaS) segment had the highest market share of 67.6% in 2021.

The reason being this model offers high agility and cost effectiveness for the companies. Moreover, the SaaS is simple to access, has a seamless user accessibility, and provides the much-required security. This is expected to have a significant impact on the Business as a Service market key trends and opportunities.

The Platform as a Service (PaaS) has a share of 20.9% in this segment.

It is reasonably popular as it offers custom solutions, flexibility, and can rapidly add capacity in peak times as well. However, lock-in and security risks are some of the challenges faced by this application.

The Infrastructure as a Service (IaaS) has a share of 11.5% in this segment.

The best thing about using IaaS is that these can also run when there are some issues with the server. However, lack of flexibility, security, and maintenance are some of the challenges associated with it.

By Enterprise Size

The large enterprises had a higher market share of 65.4% in 2021, as compared to SMEs, which had a share of 35.6%.

The reason being, the large enterprises deal with huge data sets, which can be structured data as well as semi structured data, and many times these data have to be readily accessible. This is something which has prompted more and more large enterprises to implement Business as a Service as part of their undertakings. This is expected to influence the Business as a Service market trends and forecasts.

Moreover, these data should be maintained with utmost privacy. This is the reason why the large enterprises avail this service.

By Industry Size

Based on the industry size, the IT & Telecom sector had the highest market share of 23.5% in 2021.

The IT & Telecom sector was closely followed by BFSI sector, which had a share of 21.8%.

The reason why the IT & Telecom, and the BFSI sector had the largest market shares were because both the sectors were dealing with vast amount of data. By making use of cloud technology, the Business as a Service application can handle such huge data. Moreover, the data can be retrieved as and when required. Additionally, the ability to track the performance of the business in seconds, makes it a go to application for a number of business owners. This was inferred from the Business as a Service market analysis.

The manufacturing sector had a share of 15.1%, and the retail sector had a share of 14.6%. Both these sectors made use of Business as a Service application because of its ability to be flexible and democratise the data.

The healthcare sector had a share of 9.3%, transportation 6%, and others 9%.

Region Wise Outlook

North American Market to Lead the Way

North American market, which had a market share of 33.6% in2021, is expected to be one of the most significant markets during the forecast period.

Technological advancements and increased investments on Research and Development are the major factors which are expected to increase the adoption of Business as a Service in the region. Additionally, rapid growth of IT and E-Commerce industry in the region is also expected to drive the Business as a Service market.

Asia Pacific Market: Second to North America but Still a Global Leader

Asia Pacific market, which had a share of 30.5% in 2021, is anticipated to display massive growth during the forecast period. Moreover, the region is expected to be the fastest growing market during the forecast period.

Some of the factors fuelling the growth of Business as a Service market are rapid urbanisation, upgradation of infrastructure, and rapid penetration of internet in the region.

Additionally, the rapid growth of IT, IoT, and E-Commerce industry in the region is expected to surge the growth of Business as a Service market.

European Market: Technological Advancements to Watch For

European market, which had a share of 21.3% in 2021, is expected to grow during the forecast period. Like the North American market, technological advancements in this region are expected to drive the Business as a Service market in the region. Additionally, the prominence of data tracking in this region is expected to drive the market.

Moreover, the authorities in this region are laying emphasis on data democratisation to ensure that the information is available in the required domain.

MEA Market and Latin American Market

The MEA market had a share of 6.6% and Latin American market had a share of 8% in 2021, and during the forecast period not much growth is anticipated from both the regions.

The reason being not much activities pertaining to the development of IT related infrastructure is shaping up in this region. Moreover, the focus of authorities in this region is not much towards such technological activities.

Country Wise Outlook

USA

USA market had a share of 19.2% in the North American region in 2021. During the forecast period, the USA market is expected to grow at a CAGR of 17.9%.

The reason is fast advancements being made in the area of technology, along with higher focus on Research and Development. This displays the Business as a Service market opportunities in USA.

Additionally, industries like IT and IoT industry are growing in the country, which has propelled the growth of Business as a Service market in the country.

UK

UK market had a share of 8.6% in the European region in 2021. During the forecast period, the UK market is expected to grow at a CAGR of 16.5%.

Higher focus on flexibility and looking at ways to apply the right model for a business problem is something which is driving the market in the region. Moreover, the ability to provide data on the spot is something which is driving the Business as a Service market in the region. This is expected to drive Business as a Service market future trends in UK.

China

China market had a share of 10.9% in the Asia Pacific region in 2021. During the forecast period, the market is expected to grow at a CAGR of 19.2%.

There is higher focus to upgrade the existing technological infrastructure. This is one of the reasons which is expected to drive the Business as a Service market in the country. Moreover, there is also an increasing demand of cloud technologies in the region, which is expected to drive the Business as a Service market.

India

India had a market share of 7.1% in the Asia Pacific region in 2021. During the forecast period, the market is expected to grow at a CAGR of 18.8%.

Rapid technological advancements, increasing initiatives to upgrade the existing infrastructure are some of the factors which might contribute to the growth of Business as a Service market. Apart from that, the growth of IT, IoT, and E-Commerce sector is expected to change the Business as a Service market outlook in the forecast period.

Japan

Japan had a market share of 2.8% in the Asia Pacific region in 2021. During the forecast period, the market is expected to grow at a CAGR of 13.4%.

Being a technologically advanced country, Japan currently has all that is takes to develop a world class Business as a Service market. But, the continuous advancements in the technology are something which is keeping this market rather occupied. Moreover, the growth of IT and Cloud computing sectors are expected to drive this market.

Top 5 Start-Ups Being the Force to Reckon With

With businesses on a mission to leverage human intelligence with technological precision, the start-up ecosystem of Business as a Service is looking for ways to reinvent the service.

• Copy.ai: Copy.ai was founded in 2020. It is a tool, which runs through Artificial Intelligence. The primary purpose is to generate slogans, sentences, and texts for enterprises that need to create high quality business texts.

This service offers more than 90 tools and templates. Users simply need to put the keywords and title, set the context, and outline the main points. Copy.ai generates the text and allows the users to edit them as per their convenience.

• OrdersCo: OrdersCo was founded in 2020. It provides the restaurants the tools and the partnership to manage and automate the food delivery processes. OrdersCo integrates with popular local delivery services and provides restaurants with a unified order list.
• ApplyBoard: ApplyBoard was founded in 2020. It is a study platform and is in a mission to revolutionize the way students find and apply for programs abroad.
• Reltio: Reltio was founded in 2021. It provides cloud-based SaaS data platform which converts multi source complex data into a single source of trusted information.
• XTREME-D: XTREME-D was founded in 2015. It offers cloud-based high computing on demand. Its platform AXXE-L serves the computing needs of wide array of industries.
• DPLYR: DPLYR was founded in 2014. The start-up specializes in DevOps tools and products. It enables easy and quick web deployment. The platform supports PHP, Node.js, MySQL, and MongoDB.

Some of the other notable start-ups are: Setapp, Qobra, OutSystems, Alloy, Storyblok, and HyperQube.

Competitive Landscape

With increasing cases of data theft and cybersecurity issues, the key players are looking at ways to empower cloud service with trust and transparency as per the compliance with GDPR requirements. This would certainly reaffirm commitments to global data protection laws and standards.

Some of the recent developments in the competitive landscape are as follows:

• In August 2022, Microsoft announced that the Microsoft Offensive Research & Security Engineering (MORSE) takes a three-pronged approach to securing code within the Operating System. Red, blue and green teams, each with a different role to play, help MORSE aggressively battle security threats, repair broken code and prevent issues from ever happening.
• In July 2022, AWS announced AWS Wickr, which is an end-to-end encrypted enterprise communication, which allows secure collaboration across messaging, voice and video calling, file sharing, and screen sharing.
• In August 2022, Google Cloud announced the launch of Data Studio, which is a self-service business intelligence and data visualization product, as a Google cloud service, enabling customers to get Data Studio on the Google Cloud Terms of Service.

Key Companies Profiled:

• Microsoft
• Salesforce
• Adobe Creative Cloud
• AWS
• Alibaba Elastic Compute Service
• Google Cloud
• Engine Yard
• IBM Cloud
• Heroku

Key Segments in the Business as a Service Market

By Service Type:

• Software as a Service (SaaS)
• Platform as a Service (PaaS)
• Infrastructure as a Service (IaaS)

By Enterprise Size:

• SME
• Large Enterprises

By Industry:

• BFSI
• IT & Telecom
• Retail
• Healthcare
• Manufacturing
• Transportation
• Others

By Region:

• North America
• Latin America
• Asia Pacific
• MEA
• Europe