What is the Total Addressable Market (TAM) for a B2B diversity & equity analytics platform?
The top industries that most likely to buy a SaaS technology platform for diversity & equity analytics are retail, transportation and warehousing, pharmaceuticals and biotechnology, travel and leisure, aerospace and defense, energy and utilities, technology, banking, financial services, and insurance, automobiles and parts, and chemicals, metals and mining industries. This is according to a recent report conducted by Owler and released by the Tech Republic.
The report also stated that in the United States, companies in the Southern region which includes the States of Alabama, Mississippi, Kentucky, and Tennessee "were perceived as having more diverse leadership teams than those in other locations." The report noted that according to the most recent report released by US Census, Mississippi and Alabama are "two of the most diverse states" while the Northeast region is "considered to be the least diverse."
In order to provide you with the total addressable market (TAM) for your B2B diversity & equity analytics platform product according to the given criteria, I did a top-down analysis with detailed explanation below. While there are no pre-existing reports that would directly answer your queries, I was able to provide you with estimations and triangulation derived from information and latest statistics available from reliable reports and resources. Note also that "companies" would generally mean all kinds of firms, sectors, and organizations (including non-profits) unless noted.
CRITERIA AND CALCULATIONS
1. Number of companies with at least 350 knowledge worker employees
According to a report by Tech Zone 360, there are a total of 60 million knowledge workers in the US. The total number of workforce in the US in all sectors in 2017 was at 160,597,000, this is from a report released by the Department of Labor and Training (DLT). From these given statistics, we can calculate that at an average, the percentage of knowledge workers against total workforce is:
(60 million / 160.597 million) * 100 = 37%
If we use this percentage to determine total employees that have at least 350 knowledge worker employees per company, this would mean that we are looking for companies with 945 total employees of which 63% is non-knowledge workers and 37% is knowledge workers.
The computation is from (350*100)/37 = 945 employees or for this research, we will be using data that has 1000 or more employees.
Looking at US Census Bureau data released in 2017 with the last record found was from 2015 and 2008, the total number of companies/firms that has 750 up to 5000 employees was at 12,900 while from Hoovers' database, there are about 18,193 companies that have 1000 to 4,999 employees from all sectors. For this research, we will be using the number acquired from Hoovers' database which is 18,193.
2. Number of companies that have adopted diversity in terms of gender, race and/or ethnicity
From the criteria above, we need to determine how many of these companies have diversity programs or how many of these companies embraced or adopted diversity, or companies that are considered "liberal" due to its adoption or acceptance of diversity. A report from a survey stated that 75% of tech workers in the US reported that their companies have adopted or have diversity initiatives and programs.
From a report released by the Tech Republic, an average of 61/100 or 61% of industries has adopted diversity. According to the report, "retail was perceived to have the most diverse leadership teams—which is to be expected, as one-third of the retail industry's labor force is made up of ethnic and racial minorities." The top industries that have most diverse leadership including their percentage score are as follows:
Transportation and warehousing: 66.0/100
Pharmaceuticals and biotechnology: 65.5/100
Travel, recreation, and leisure: 64.5/100
Aerospace and defense: 63.0/100
Energy and utilities: 61.0/100
Banking, financial services, and insurance: 58.5/100
Automobiles and parts: 58.0/100
Chemicals, metals, and mining: 58.0/100
Another report from Harvard Business Review found that in 2017, 31% of companies in the US does not have women (or does not embrace diversity) in their leadership roles, which would mean that 69% are considered "liberal" companies.
For the purpose of this research, we will be using the average percentage of the above reports to calculate the number of companies in the US that has embraced diversity.
Average % = (75% + 61% + 69%) / 3 = 68.33%
68.33% (18,193) = 12,431 companies that has adopted diversity
TOTAL ADDRESSABLE MARKET (TAM)
The TAM for B2B SaaS tech startup product for the above criteria is clearly dependent on how the "per user" is defined in terms of its limit or capacity. For example, if "per user" means "per knowledge worker" or "per company" or at least "10 users per company with 350 knowledge workers", it will be calculated accordingly. If we assume "per user" to be "per company" and if there is a 100% market penetration and the B2B SaaS platform product value is $5 per month per company, that would give a total addressable market of:
12,431* $5 = $62,155 per month or $745,860 per year. If 10% penetration, it will be $6,216 per month or $74,586 per year.
However, if "per user" is more than 1 per company or user is defined as "per knowledge worker" and using the calculated number of companies that have at least 350 knowledge workers and have embraced diversity, we can calculate TAM at 10% market penetration:
12,431 * 10% * 350 (minimum) * $5 = $2.2 million per month or $26.11 million per year.
The annual total addressable market (TAM) for a B2B SaaS diversity and equity analytics platform that sells its product at $5 per month for companies that have at least 350 knowledge workers and have adopted diversity is between $74,586 to $26.11 million annually, assuming 100% market penetration. The revenue is fully dependent on the products' user capacity per company. The estimated average percentage of companies that has diversity programs and initiatives in the United States is at 68%. The average number of employees for these companies is 945 of which 63% is non-knowledge workers and 37% is knowledge workers.