Japan's Software-as-a-Service (SaaS) market is expected to exceed US$20.1 billion by the end of 2035. The market size in 2024 is expected to be US$8.4 billion , growing at a CAGR of 10.5% from 2025 to 2035 .

According to experts at KD Market Insights, one of the key factors expected to drive the growth of the Japan Software-as-a-Service (SaaS) market is the growing digital transformation efforts in Japan. The Japanese government is actively working to implement digital transformation initiatives to modernize operations, improve efficiency, and strengthen competitiveness. According to our researchers, Japan ^{ranks 4th} in the Cloud Readiness Index (CRI) and is the top country for cloud investments by SMEs. Microsoft, Alphabet, and IBM play key roles in the Japanese SaaS market.

Driving the Japanese Software-as-a-Service Market - Analysts' Views

According to analysts at KD Market Insights, the main growth drivers for Japan's Software-as-a-Service (SaaS) market are:

Increasing Demand for Cloud Services The adoption of cloud computing services is on the rise in Japan. Business organizations in Japan want to reduce the costs of their IT infrastructure without compromising performance. Adopting cloud computing services like SaaS allows Japanese businesses to increase flexibility and enable remote work. These technologies also improve accessibility and scalability as well as cost, making them favorable IT solutions for businesses in the country.

Accelerating Shift to Society 5.0: Japan is moving towards Society 5.0, a more beneficial concept than Industry 5.0. The shift to Society 5.0 has driven businesses in the country to seek solutions that help them streamline workflows, maintain productivity, and collaborate effectively. As SaaS offers industry-specific solutions aligned with the unique needs and regulatory requirements of various verticals, these advanced tools are being rapidly adopted to address businesses' unique pain points, compliance requirements, and workflow challenges. These factors are expected to drive the market growth over the forecast period.