SAP’s member of the Executive Board Thomas Saueressig on Thursday said India was one of the foremost growth markets for the German Software major and it had doubled cloud revenues in the country for seven consecutive quarters year-over-year (YoY).
Speaking to reporters in Bengaluru, Saueressig emphasised that India was the fastest-growing market unit of the APJ region over last many quarters.
The comments from the SAP executive board member come against the backdrop of the Walldorf-based company registering a 24 per cent YoY growth in cloud revenue at EUR 3.18 billion and up 22 per cent at constant currencies, up 1 percentage point sequentially. The company’s current cloud backlog in the quarter grew 25 per cent to EUR 11.15 billion and was up 25 per cent at constant currencies.
In the Q1 2023 quarterly statement, SAP highlighted the outstanding cloud revenue growth in three specific countries including India, Brazil and Germany above others. The company revised its 2023 outlook to EUR 14.0-14.4 billion in cloud revenue at constant currencies (2022: EUR 11.43 billion), up 23 per cent to 26 per cent at constant currencies.
Highlighting the impact of SAP solutions, Saueressig said 70 per cent of India’s GDP touches an SAP system. “So, we see the significance of SAP in India and for sure with that we know that we have an obligation to further help and support in this digital transformation.”
India Focus
SAP Labs India, which drives SAP’s product strategy, is the company’s largest R&D center outside SAP’s headquarters in Germany. In total, the teams based out of Bengaluru and Gurgaon cater to 4.5 lakh customers worldwide.
“[..] 40 per cent of the global R&D for SAP is happening here (in India). A quarter of all the patents that come out of SAP happen here. And that explains the reason for doubling down on India,” said Sindhu Gangadharan, SVP and MD of SAP Labs India, during the media roundtable.
To highlight SAP’s focus on India, Gangadharan and Saueressig revealed that a new Bengaluru campus was coming up in 2024 or 2025, which would host more than 15,000 employees.
Talking about the huge potential in the mid-market of India, Saueressig spoke on the launch of ‘Grow with SAP’ offering, which is helping as many as 10,000 small and medium enterprises (SMEs) in the country.
Almost 80 per cent of SAP customers in India are mid-size organisations and this customer segment is likely to continue to drive its growth in the country, he added.
The German software multinational has partnerships with institutes like IIM Bangalore, NID Ahmedabad and Kellogg Institute of Management in three areas, including Learning, Research and hiring talent and upskilling them.
On Regulations
With reports of the Centre increasingly looking at a policy to permit companies to set up data embassies within India and other regulations under the upcoming Digital Data Protection Bill, cloud companies are mostly having restrategise.
Commenting on the regulations and laws of the land, Saueressig said that SAP sees no negative impact based on the laws around cloud technology. “If you think about India, we double down on our data centres along with our partners here to have exactly the local representation of our cloud products in India, for India.”
“We follow the law and it has no impact because we absolutely provide products out of India and provide them the local storage in India itself,” he added.
‘SAP Products Thriving In Current Market Situation’
Given the tough market conditions globally and IT spending slowing down across industries, most tech companies anticipate a slowdown in 2023. But Saueressig expressed his optimism for SAP and its performance.
Quoting positive statistics from the Q1 2023 results, the SAP board member said that SAP products are clearly thriving in the present market situation.
“The demand is bigger than ever (for SAP) because everybody needs to have business-critical software to solve critical problems pertaining to supply chain, sustainability, cash flow, optimisation potential and productivity. That is what everybody needs to right now and that is exactly what we do,” Saueressig said.
“That’s the reason why we are looking very positively to the future,” he concluded.
