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Demand for Cloud Services in India to Accelerate in 2021 And Beyond

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With the increase of remote workers by organizations due to the pandemic, the demand for cloud services in India continues to grow.

According to a recent report by research firm Gartner, enterprise spending on public cloud services in the country is expected to touch $4.4 billion in 2021, an increase of 31.4% over the previous year. The analyst firm predicts that the public cloud market growth will accelerate to $5.62 billion in 2022.

A large part of this growth will come in the wake of the pandemic, which has accelerated the move to cloud. Google’s parent Alphabet reported revenues of $55.3 billion, a 34% jump from the same period last year, and a record-breaking profit of $18 billion for the first quarter of 2021.

The company’s revenue from cloud saw a 46% increase year-over-year. Sundar Pichai, Alphabet CEO, stated that the growth rate of the company’s cloud platform is well above the growth rate for Cloud overall.

Microsoft revealed that its cloud business grew 50% faster compared to a year ago. Amazon, the market leader with over 30% market share, will announce Q1 earnings results later today. AWS revenue for Q4 2020 was $12.7 billion.

According to Gartner, the continued trend of increased remote workers in 2021, will lead to an increase in spending on desktop-as-a-service (DaaS) and infrastructure-as-a-service (IaaS). These segments are forecast to grow 47.7 %( to USD 73 million) and 52.2 % (to USD 1.44 billion), respectively.

Indian CIOs saw the benefits of cloud during the first wave of the pandemic in 2020, Gartner research vice president Sid Nag said.

“To build business resilience and minimize the impact of continued disruptions, investing in cloud is unavoidable. India has experienced consistent double-digit growth in cloud spending over the last three years, the pandemic only expedited the shift,” he added.

Spending on Cloud Business Process Services (BPaaS) is expected to grow 9.2 %to USD 207 million, Cloud Application Infrastructure Services (PaaS) by 30.5 %to USD 997 million, Cloud Application Services (SaaS) by 20.8 %to USD 1.41 billion, and Cloud Management and Security Services by 18 %to USD 317 million in 2021.

Gartner said spending on SaaS and cloud management and security services will experience double digit growth in India for the first time.

“SaaS has been pivotal in supporting the sudden increase in the mobile workforce, as well as customers, in 2020. Learning from this, Indian CIOs will continue to build on the above trend as they move towards a composable business environment,” Nag said.

Within SaaS, customer experience and relationship management and content services will be the highest growing segments in 2021, forecast to grow 24.9 %and 26.1 per cent, respectively, as per Gartner.

Earlier, in a report published by research firm International Data Corporation (IDC), India’s public cloud services market, including IaaS, PaaS and SaaS is likely to touch $7.4 billion by 2024 growing at a CAGR of 22.2% for 2020-24.

“The current uncertainty has accelerated the demand for public cloud services. Getting to the “next normal” entails businesses to leverage cloud as part of their business plans. Irrespective of where the businesses are positioned across the IDC’s “response to recovery” framework, organizations state cloud is imperative in attaining their core business objectives. Enterprises across verticals like financial services, IT/ITeS, media, education among others are witnessing a surge in demand,” Rishu Sharma, Principal Analyst, Cloud and Artificial Intelligence, IDC India.

The public cloud services market has nearly tripled since 2016. As businesses focus on gaining agility, flexibility, and resilience, reliance on cloud platforms and infrastructure as well as software as a service will become pivotal. Although most organizations in India have adopted cloud in some stage, the current pandemic situation has now enabled organizations to rely on public cloud IaaS and PaaS to expedite the development process and deployment of business applications.

“Enterprises which adopted cloud and other digital technologies fared better than enterprises with traditional IT systems during the pandemic, thereby stressing the urgent need for digital transformation,” Sharma mentioned.

During the pandemic, there has been an increase in demand for cloud-based collaboration tools, content management solutions, and online streaming platforms.

Experts continue to see high demand from large enterprises, tech start-ups and government institutions. The pandemic, along with investments from tech giants is also expected to propel the adoption of cloud among SMBs in the coming months.

 

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Sohini Bagchi
Sohini Bagchi is Editor at CXOToday, a published author and a storyteller. She can be reached at sohini.bagchi@trivone.com