India is fast moving to the cloud

Nasscom, the apex body of the US$155 billion Indian IT-BPM industry, sees strong growth opportunity in the nation’s cloud market as Indian firms emerge as not just consumers of cloud, but also suppliers of the technology in a fast-growing global marketplace

April 11, 2019

Cloud has become mainstream with the growing presence of “hyper scale” cloud providers in big data, analytics, internet of things and artificial intelligence, as per Nasscom

The global cloud computing sector was estimated at around US$190 billion at end 2018, out of which the Indian cloud computing market was worth at around US$2.5 billion

While the global cloud market is estimated to grow at a CAGR of 16.5% to reach US$345 billion by 2022, in India it is estimated to grow at 30% CAGR to touch US$7.2 billion

Apart from local adoption, a steady growth in India’s IT-BPM export - reported at US$129 billion in 2017-18 - will provide further push for cloud in the Indian IT-BPM space

A strengthening of the Indian economy, driven by rising domestic consumption and exports, has offered varied opportunities for enterprises, be it a startup, a multinational or a government-run entity. And to best access the Indian market, manufacturers and service providers, spanning the energy, transportation, healthcare, finance, and food sectors, among others, have employed fresh investments, often in foreign partnerships. Herein, new-gen technologies have come up as a major enabler to best utilise investments by minimising time and cost and maximising efficiency and outreach. One such new-gen technology,  cloud computing, has helped address new challenges and capture new opportunities for up-and-coming ventures as well as legacy businesses seeking to reinvent themselves. The efficiency achieved has helped enterprises better allocate their resources, drive new innovation and expand into new markets.

Cloud’s success in India can be best represented by the nation’s government-run enterprises. Large cloud adopters such as Indian Railways, Indian Oil Corp Ltd, State Bank of India, among others, have led the way for Indian companies across sectors and of varied sizes to move their operations to the cloud.

Cloud helps provide software, storage and computing capabilities to users from remote data centers over the internet. The concept of cloud has been around for two decades, but has now become mainstream with the growing presence of “hyper scale” cloud providers in big data, analytics, internet of things (IoT) and artificial intelligence (AI), according to an April 2019 report by the National Association of Software and Services Companies (Nasscom). The apex body of the US$155 billion Indian IT-BPM industry sees strong growth opportunity in the nation’s cloud market as Indian firms emerge as not just consumers of cloud, but also suppliers of the technology in a fast-growing global marketplace. The leadership position played by Indian IT-BPM firms worldwide has helped leverage this opportunity, driving future innovation and investment. Indian firms are also partnering with foreign entities to develop cloud applications.  

Cloud’s success in India can perhaps be best represented through the uptake of the technology by the nation’s government-run enterprises. Large cloud adopters such as Indian Railways, Indian Oil Corp Ltd, State Bank of India, among others, have led the way for Indian companies across sectors and of varied sizes to move their operations to the cloud. As a result, India has come up as a lucrative market for cloud innovation for sector leaders such as Amazon Web Services, Microsoft Azure, IBM Cloud, Google Cloud, Oracle cloud, among others. The opportunities have been driven by a growing awareness of cloud at a time when the success of any product or service is dependent on the application of the right technology. Hence, India’s growing startup space as well as legacy businesses have come up as leading users of cloud technology across ecommerce, manufacturing, healthcare, financial services and telecom sectors.

Today, 90 per cent of Fortune 500 companies use cloud technology, as per Nasscom. Rising application of new technologies such as AI, IoT, machine learning (ML), robotics and blockchain have made cloud an organic component of a successful business. Nasscom said that the global cloud market was valued at around US$190 billion at end 2018, in which India contributed US$2.5 billion. While the global cloud market is estimated to expand at a CAGR of 16.5 per cent to reach US$345 billion by 2022, the sector in India is estimated to grow at a 30 per cent CAGR to touch US$7.2 billion by 2022. In India, cloud demand has been mainly led by Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS) products with 39 per cent stake each, respectively, offering significant scope for growth. Cloud adoption is being further encouraged by the latest innovations such as Anything-as-a-Service (XaaS) and edge computing.

Cloud technology’s growth in India has also been propelled by favourable policies and regulations rolled out by the Indian Government, especially under the Digital India initiative which promotes offering of government services over the internet. This is expected to boost IT spending in India which in 2018 made up for only 1.6 per cent of GDP, or almost half the global average of 3 per cent. Meanwhile, India’s cloud adoption is currently placed at 6 per cent, which is lagging behind global average of 7.9 per cent, as per Nasscom. The apex body said that this nascent stature provided “significant scope for growth, both in terms of IT spending and adoption of Cloud in India in the near future”. Apart from local adoption, the steady growth in India’s IT-BPM export – reported at US$129 billion in 2017-18 – will provide further push for cloud adoption in the Indian IT-BPM sector that’s targeting revenue of US$350 billion by 2025.