ClearTax is clear about their expansion in the Middle East, Saudi Arabia is their first stop
We had a discussion with Rohit Razdan, Chief Business Officer, ClearTax to talk about their entry to the Middle East through a $75 million Series C fund-raised for the expansion into international markets. This move of ClearTax with significant investment showcases their strong and successful history of India and their expertise which would positively towards the digital transformation objectives of the Saudi Vision 2030.
Talking about their expansion, Rohit said, “While formulating a strategy for our global expansion, we observed that countries in the Middle East, starting with the Kingdom of Saudi Arabia, are at the cusp of massive digital reforms. As part of Vision 2030 envisioned by Deputy Crown Prince Mohammed bin Salman, the government is launching a range of digital-first initiatives that will transform the Kingdom. We keep a tab on major government digitization initiatives and towards that we were tracking middle-east broadly and KSA specifically. When there was clarity earlier this year on e-invoicing timelines, we decided to enter. We launched in KSA in Oct 2020 and we are very bullish and expect a considerable portion of our future growth to come from this market.”
With Saudi Arabia mandating e-invoicing early December 2021, ClearTax entered Saudi Arabia, the company with the launch of electronic invoicing products for medium to large enterprises and will expand to VAT compliance, Accounts Payables and Receivables automation and B2B payments in the next few months. Clear envisions building a B2B Business Network across the globe that helps businesses with taxation, compliance, procurement, invoicing, payments, and collections.
When asked about how the fintech industry is shaping in the Kingdom, Rohit appreciated extensive efforts by the Government and Saudi Arabian Monetary Agency (SAMA) and stated that, “A lot of young entrepreneurs are setting up fintech companies. These companies are leveraging technologies like Blockchain, AI/ML and plug-n-play API infrastructure to innovate and disrupt the traditional market. In my opinion, the fintech journey of any country starts with digital banking, e-payments and then evolves around all aspects of the financial lives of individuals and businesses. E-payments are booming in Saudi - currently ~35% - 40% payments are happening digitally against a target of 70% in 2030. E-invoicing and other compliance reforms from ZATCA will also lead to rapid adoption of digital tools.”
ClearTax launched in the KSA market in Oct 2021. In the last three months, they have majorly invested in building the e-invoicing product, building a brand in the market. “Considering the huge potential of the market, we would be investing USD 20 million over the next couple of years. Our major investment will be focused on localization of the product suite including Arabic language support, Cloud infrastructure setup inside the kingdom and customization as per local business needs. We would also be investing heavily in hiring local teams and brand building in the country since for many of the customers our products and presence will be relatively new”, said Rohit.
While talking about country’s digital transformation goals and their efforts to smoother the taxation industry in the Kingdom, he said “First, we must commend the KSA leadership for undertaking massive digital reform to unlock major economic growth and enable the diversification of the economy. We also think that the regulatory regime is very forward looking and in the best interest of businesses and consumers in the long term. We have launched a Cloud based E-invoicing product which has been approved by ZATCA. We have a solid product roadmap for Saudi Arabia and will launch a series of digital and cloud-based solutions in the next few quarters. I am personally proud to participate in the Government's grand vision and play our part in building the digital led economy.”
“We are early in the KSA market but have already had strong traction. We are serving more than 50 companies and almost all of them are private. Our customers come from all industries - retail, manufacturing, services etc. as the use case is not tied to industry. We are serving both local KSA companies as well as multinational companies with KSA presence. In general, our customers are mid to large sized companies that have a mindset to adopt technology. We also have some smaller sized customers with certain complexities or with clear growth visibility in the business coming to us.”
Saudi Arabia is the largest in the GCC with small cities and local businesses set up in every corner of the street across the country. We were keen to know how ClearTax will be supporting small business and if they have started attracting business from small cities. Commenting on this, Rohit said that their clients are from larger cities Riyadh, Dammam, and Jeddah at the moment. He added “But we have already started receiving enquiries from businesses in smaller cities like Medina, Tabuk, and Al Khobar. These customers are reaching out to us over the internet or through referrals from existing clients. As our products can be integrated with most of the accounting/ invoicing systems and ERPs, we plan to work with local solution providers and power their solutions with ClearTax plug-n-play cloud infrastructure.”