Software-as-a-service (SaaS) lets users access software online. As digital transformation (DX) and cloud adoption gain momentum in Japan, SaaS is being applied across a wide range of workflows, creating new opportunities for service providers.

However, some businesses considering entering the SaaS market might wonder whether there’s still room for growth. When launching a new venture, understanding a sector’s size and growth potential is valuable for identifying opportunities.

This article explains the size of the SaaS market in Japan and globally, its growth potential, areas attracting attention, and revenue models well suited to SaaS businesses.

Key takeaways

• The Japanese SaaS market is expected to continue growing, driven by factors such as the DX of businesses, the migration to cloud platforms, and efforts to address labor shortages.
  
• Artificial intelligence (AI) SaaS, AI agents, vertical SaaS, security SaaS, business process-as-a-service (BPaaS), and related areas could expand further in the future.
  
• For SaaS businesses, selecting a revenue model suited to the service matters, along with establishing infrastructure that can flexibly accommodate recurring billing, plan changes, and usage-based billing.
  

The current SaaS market size in Japan and globally

The SaaS market is expanding in Japan and worldwide. The latest data shows its scale and expansion trends domestically and internationally.

The size of the global SaaS market

As cloud migration accelerates, the global SaaS market continues to expand. Gartner projects global end-user spending on SaaS to increase from $250.8 billion USD in 2024 to $299.1 billion USD in 2025, representing 19.2% year-over-year (YoY) growth. The overall public cloud sector is projected to grow 21.5% in 2025, and demand for hosted services, including SaaS, keeps rising.

One factor driving this expansion is the widespread adoption of emerging technologies, including AI. The Gartner report highlighted that as businesses expand their use of AI, cloud computing will play an increasingly important role in supporting corporate operations and results. The rise of generative AI models tailored to specific industries and applications will drive future spending on public cloud services.

Considering overall industry trends, the global SaaS market has reached a significant size and is likely to keep expanding as it incorporates AI and other new technologies.

The size of the Japanese SaaS market

According to a survey conducted by Fuji Chimera Research Institute, the SaaS/platform-as-a-service (PaaS) segment for enterprise software is projected to reach ¥3.4 trillion in fiscal year 2029, a 73% increase from 2024.

This expansion reflects changes in the software itself. As the shift from packaged software to SaaS and PaaS moves forward, it is spreading beyond collaboration and marketing, moving toward the cloud for systems that support back-office workflows and core business functions. The adoption of emerging technologies including AI assistants and AI agents is also expected to drive future market expansion.

Why the SaaS market continues to grow

Several factors drive SaaS market growth, including companies’ uptake of digital technologies, changing work styles, and technological advances such as AI. As enterprises in Japan pursue DX and address ongoing labor shortages, demand for SaaS solutions—which can simplify business operations—is gaining momentum.

DX and migration to the cloud are gaining traction

As companies’ DX continues to advance, using cloud-based applications for day-to-day work has become firmly established. An IPA report on DX trends in 2025 found that among domestic firms, 41.4% reported that they “utilize it company-wide,” while 17.2% reported that they “utilize it within specific business divisions.”

With SaaS, you can access the features you need over the internet without having to set up your own servers or other IT infrastructure. As companies continue DX and migrate to cloud services, opportunities to adopt SaaS are increasing.

Demand for operational efficiency to deal with labor shortages

In Japan, structural labor shortages driven by factors such as a declining birthrate and an aging population have become a major challenge for companies. The 2025 White Paper on Small Businesses highlights improving operational efficiency and productivity through digital investment as one way to address labor shortages. In addition, investment in software is increasing in industries facing severe labor shortages, including construction, retail, lodging, and food and beverage sectors.

To operate with a limited staff, businesses need a system that increases efficiency for routine tasks such as accounting, time and attendance tracking, and customer management. These corporate demands further drive interest in SaaS.

Minimizing deployment costs and ongoing operation expenses is easier

SaaS removes the requirement to set up in-house servers or manage software updates and maintenance. This can reduce implementation and operational burdens compared to traditional software.

Because many services let users choose a plan depending on the features they need and the number of users, SaaS suits large corporations as well as small and medium-sized enterprises (SMEs) that struggle to make significant upfront IT investments.

AI adoption is expanding the range of SaaS applications

Advances in AI technologies, especially generative AI, have helped expand the SaaS market. While traditional SaaS focused primarily on information management and simplifying workflows, more offerings now provide AI-powered features such as document creation, data analysis, customer inquiry handling, and sales support.

As AI agents capable of automatically performing multiple functions become more widespread, the scope of tasks SaaS can handle is likely to broaden. Advances in the technology are projected to drive additional offerings and applications, supporting the SaaS sector going forward.

Fields with strong SaaS market growth potential

The scope of SaaS deployment is expanding further as companies adopt digital tools and processes and AI becomes more widely adopted. As investment in AI and security rises in Japan, growth is expected in emerging SaaS sectors, such as services tailored to certain industries and business functions.

AI SaaS and AI agents

As generative AI has become more widespread, interest is growing in SaaS solutions that incorporate the technology and agents capable of autonomously performing defined tasks. IDC Japan reported that the domestic AI platform and analytics market reached ¥373.4 billion in 2024, a 36.6% increase from the previous year, and is projected to continue growing rapidly.

The scope of AI applications extends beyond text generation and data analysis, and now covers customer inquiries, sales support, information gathering, and business process automation. As AI agents become more widespread, the range of functions handled by SaaS is expected to broaden further.

Vertical SaaS

Vertical SaaS refers to offerings tailored to specific industries, including healthcare, construction, real estate, and retail. In the business-to-business (B2B) SaaS segment, demand is high for tools designed around specialized workflows, commercial practices, and regulations. One advantage is their ability to solve challenges that general-purpose SaaS products struggle to address.

In Japan, labor shortages and the digitization of workflows are major challenges across many industries. Therefore, there is still room for growth in adopting vertical SaaS solutions designed to handle industry-specific operations. Incorporating AI can automate highly specialized work as well.

Security SaaS

As cloud service use increases, the value of safeguards protecting corporate data and systems also grows. IDC Japan estimates the domestic security software market will grow 14.6% YoY in 2024.

Security SaaS offers a variety of capabilities, including ID and access management, threat detection, data protection, and cloud monitoring. As organizations rely more heavily on cloud platforms, they face more sophisticated cyberattacks and new threats created by generative AI misuse. As a result, demand in the security sector is projected to keep rising.

BPaaS

BPaaS is an approach that uses cloud technology, such as SaaS, to deliver functions including accounting, payroll, and customer support, as external services. Unlike SaaS, which provides the software itself, BPaaS provides the system and handles the actual processing and workflows.

Addressing labor shortages and improving operational efficiency are key challenges for companies in Japan, so BPaaS, which supports system implementation while simplifying and outsourcing business processes themselves, is considered a good fit.

Revenue models and billing infrastructure for SaaS businesses

For SaaS businesses, selecting a revenue model that aligns with the services you offer and how customers use them matters because it helps you operate flexibly as the operation grows. Below are the available structures and the billing processes they require.

The main revenue models of SaaS businesses

SaaS businesses can choose from a variety of revenue models, with the best fit depending on the service’s characteristics and customer usage:

• Subscription billing
  
• User-based billing
  
• Usage-based billing
  
• Hybrid billing
  
• Performance-based billing
  

The choice of revenue model affects income stability, customer lifetime value (CLV), churn rate, and annual recurring revenue (ARR). A pricing system can then be designed around the value customers derive from the service and how they use it.

The invoicing and billing management required for monetization of SaaS

Once a revenue model is selected, billing, contract changes, and cancellations require proper handling.

For instance, the following must be supported:

• Recurring invoicing and automatic updates
  
• Upgrading or downgrading plans
  
• Calculation of usage-based billing
  
• Changing contract periods and invoicing cycles
  
• Processing cancellations
  
• Supporting multiple pricing plans and currencies
  

For overseas expansion, particularly through cross-border ecommerce, multiple pricing structures matter. Beyond developing the service itself, a flexible billing and invoicing infrastructure helps support recurring income.

How Stripe Billing can help

Stripe Billing lets you bill and manage customers however you want—from simple recurring billing to usage-based billing and sales-negotiated contracts. Start accepting recurring payments globally in minutes—no code required—or build a custom integration using the API.

Stripe Billing can help you:

• Offer flexible pricing: Respond to user demand faster with flexible pricing models, including usage-based, tiered, flat-fee plus overage, and more. Support for coupons, free trials, prorations, and add-ons is built-in.

• Expand globally: Increase conversion by offering customers’ preferred payment methods. Stripe supports 125+ local payment methods and 130+ currencies.

• Increase revenue and reduce churn: Improve revenue capture and reduce involuntary churn with Smart Retries and recovery workflow automations. Stripe recovery tools helped users recover over $8.2 billion in revenue in 2025.

• Boost efficiency: Use Stripe’s modular tax, revenue reporting, and data tools to consolidate multiple revenue systems into one. Easily integrate with third-party software.

Learn more about Stripe Billing, or get started today.

FAQs about the SaaS market size