Government Subsidy

How Freshworks Used Government Subsidies to Become a Global SaaS Leader

Freshworks, the SaaS (Software as a Service) powerhouse, has not only disrupted the global software market but also carved out a unique path to success. Starting from a small coastal city in India, Freshworks scaled to a global level with clever strategies, innovative products, and the savvy utilization of government subsidies. Here’s how this Indian unicorn rose to prominence and how other businesses can replicate this journey.

Freshworks was founded in 2010 as “Freshdesk” in the city of Chennai, India. Girish Mathrubootham, the founder, spotted an opportunity to create simple, scalable customer service software. Frustrated by poor customer support from other software vendors, Girish envisioned an easy-to-use and affordable solution for businesses of all sizes.

In 2017, Freshdesk rebranded to Freshworks, reflecting its broader suite of products, including customer relationship management (CRM), IT service management, and marketing automation tools. By 2021, Freshworks achieved unicorn status, going public on the NASDAQ with a valuation of over $10 billion.

Freshworks offers cloud-based software solutions designed to make business processes seamless. Its products include:

  1. Freshdesk: A customer support platform.
  2. Freshsales: A CRM tool for sales and marketing.
  3. Freshservice: IT service management software.
  4. Freshmarketer: Marketing automation for businesses.

Freshworks’ user-friendly interfaces and competitive pricing quickly attracted global attention, helping it compete with giants like Salesforce and Zendesk.

Government Subsidies That Paved Freshworks’ Way

Freshworks’ success story also involves leveraging government subsidies and schemes that promoted innovation, startups, and exports. Here is a deep dive into the subsidies that supported its journey:

1. Startup India Initiative
  • What it is: A flagship initiative by the Government of India to boost startups by providing tax exemptions, funding support, and ease of business operations.
  • How Freshworks Benefited:
    Freshworks took advantage of tax breaks under the Startup India scheme, reducing operational costs during its initial stages. The program also helped Freshworks connect with mentors and gain access to funding opportunities.

2. Software Technology Parks of India (STPI)

  • What it is: A scheme aimed at promoting software exports with benefits like tax exemptions under Section 10A of the Income Tax Act and infrastructure support.
  • How Freshworks Benefited:
    Operating as an export-oriented software unit under STPI, Freshworks enjoyed income tax exemptions for the initial years, which significantly bolstered its growth in the global SaaS market.

3. Export-Linked Incentives

  • What it is: Subsidies for businesses focused on exporting services or goods, including reduced customs duties and access to foreign trade programs.
  • How Freshworks Benefited: Freshworks leveraged export incentives to expand its global footprint, ensuring cost-effective international operations.

4. Skill Development Programs

  • What it is: Government programs offering subsidies for training employees in emerging technologies.
  • How Freshworks Benefited: Freshworks utilized skill development subsidies to train its workforce in cutting-edge SaaS technologies, keeping its teams ahead of the curve.

Lessons for Other Businesses

Freshworks’ strategic use of government subsidies offers a roadmap for businesses aiming to scale globally:

  1. Leverage Tax Breaks: Apply for tax exemptions under initiatives like Startup India or similar schemes in your region.
  2. Focus on Exports: Export-linked incentives can reduce your operational costs and make your products globally competitive.
  3. Invest in Training: Take advantage of subsidies for employee skill development to build a world-class team.
  4. Embrace Local Innovation: Align with initiatives like Make in India to receive R&D funding and other benefits.
  5. Utilize IT Parks: Set up your operations in software technology parks to enjoy infrastructure and tax-related perks.

How YourFinB Can Help

At YourFinB, we specialize in helping businesses identify and apply for the right subsidies to fuel their growth. Whether you’re a SaaS startup like Freshworks or a traditional business looking to modernize, we can assist you with:

  • Understanding government schemes.
  • Structuring operations to maximize benefits.
  • Managing compliance and documentation.
  • Planning exports and scaling internationally.

Freshworks’ journey from Chennai to Nasdaq is a testament to the power of innovation, hustle, and leveraging government support. By strategically using subsidies and aligning with national growth initiatives, Freshworks not only scaled rapidly but also inspired countless startups to dream big.

For businesses aiming to replicate this success, understanding, and using government subsidies is not just an option—it is a game-changer. And with the right guidance, your company could be the next global leader in its industry.