Considered as a high point of cloud computing, software-as-a-service, or SaaS, is the application of cloud-based servers and services for specific functions within a company. It applies all the advantages that cloud solutions have to offer, such as on-demand access, authoritative omnipresence, a high level of user convenience, reduction in physical space and manpower, and reduced costs. The service provider or the vendor makes their services available over the internet, with certain instances where a few offline features can be made available.
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Adoption of SaaS Boosted by Increasingly Complex IT Structures
The global SaaS market is progressing at a CAGR of 27.9% within a forecast period from 2015 to 2022. This market was valued at US$23.88 bn in 2014 and owing to its staggeringly positive growth rate, will reach US$164.29 bn by 2022. What is driving this market at such a high rate, is the heavy demand for outsourcing activities by companies from developed economies. Many companies are preferring to outsource some of their functions through cloud solutions or the global SaaS market to avail its many benefits.
The rapidly evolving IT industry is making it increasingly challenging for IT companies to keep up with the pace using conventional in-house teams and business models. Many companies – even the largest ones – are facing obstacles such as a slow rate of growth and a relatively slow-moving economy. At the same time, the addition of modern and ever-changing concepts to an older IT structure can become needlessly complicated. To avoid this, companies often resort to outsourcing one or several processes. This high complexity of a company’s IT structure is therefore what is driving the global SaaS market.
Economies are Gaining from Global SaaS Market
The double benefit derived from this is that companies from developed regions attain the advantages such as faster work rates, more physical space to work with, and the delegation of a set amount of work to an overseas service provider. The provider, on the other hand, is usually from a developing economy, which allows them to generate a higher income in a relatively sluggish economy.
Therefore, both clients and service providers are aggressive about growing in the global SaaS market. This is visible in a geographical representation of the global SaaS market. North America had led the global SaaS market in 2014, when it held nearly 55% of the market, owing to the presence of leading players and a high rate of cloud computing usage. Most players have made a high rate of use of SaaS solutions, including web conferencing tools, cloud based office suites, and HCM.
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The global SaaS market is, however, still hampered by issues such as regulatory disparities and fear of data theft. Security and privacy have always been a high cause of concern in the IT industry, and the global SaaS market can make it difficult for players to trust a service outside the company boundaries. But as shown by a large number of players, these problems can be mitigated and the global SaaS market can be pushed farther ahead.