When the coronavirus emerged at the end of 2019, few could have predicted its impact on the business climate we face today.
The software as a service (SaaS) industry has yet to feel the full force of COVID-19. In Q1 2020 many SaaS companies still made their revenue plans. Website traffic and signups saw only small decreases. However, there will be tougher days ahead.
In Q2, businesses should expect to see both new and existing revenue impacted. The good news moving forward is that SaaS businesses have some built-in advantages. Since SaaS products are delivered over the internet and maintained in the cloud, they are easier to deploy and manage. Processes and personnel aren’t constrained by the physical requirements of other industries. They both can both work remotely. As an example, for the safety of our employees, we moved to a 100 percent remote workforce, which we were able to do with only a few days of notice.
The business implications for SaaS will be mixed depending on the sector. Demand for remote customer support, cloud telephony, chat, chatbots and engaging customers over popular channels like WhatsApp has increased. Logistics, transportation, education, government and e-commerce sectors are still consuming SaaS technologies, while travel and hospitality have dropped off. Manufacturing is softening.
Cost conservation is the need of the hour. Like many SaaS companies, we have paused general hiring, but are still recruiting for key positions. Yet, the SaaS industry is also stepping up to support its workforce. Like many companies, we have pledged not to lay off employees. At Freshworks, we have also adopted a “no one left behind” policy to ensure that our housekeeping staff and other hourly workers that support us continue to be paid.
Free products are also being offered to help many small and medium businesses better adapt. We have launched free chat and telephony offers to help these companies better support their customers while building new apps to help existing customers.
To aid the ecosystem in India, top venture capital firms are also pitching in. Sequoia Capital, Accel Partners, and Lightspeed Venture Partners have set up a Rs 100 crore ($13 million) grant to back startups that are helping combat the COVID-19 crisis. Freshworks has also committed capital to this fund.
Overall, the SaaS business is not immune to the downturn but will be more resilient than other industries. By keeping a close eye on costs and continuing to add value to our customers, the industry will navigate the crisis and could emerge even stronger on the other side.
The author is the founder and CEO of Freshworks