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How India Is Setting the Stage for Cloud Success

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With more and more businesses in India turning to Cloud to chart their next phase of growth, global cloud companies are making huge bet on the country’s emerging cloud market. Last week, the launch of Google Cloud’s second cloud region in India at NCR Delhi, further confirms the fact that every major cloud player – Google, Microsoft, Amazon, Oracle, IBM, Cisco and Alibaba, among others – is making big investment in India. Experts believe that India is likely to emerge as a powerhouse for cloud growth.

According to Nasscom, the Indian cloud computing market is currently valued at $2.2 billion and is expected to grow at 30% year-on-year to reach $7.1 billion by 2022. A large part of this growth is driven by the pandemic situation, which has accelerated the move to cloud. The country’s cloud growth and adoption will be further accelerated by customers’ demand for rapid digital innovation and the presence of major cloud providers as well as innovative cloud startups.

As Thomas Kurian, CEO at Google Cloud said at the launch of the new Cloud region that’s located close to the national Capital, “We have seen enormous growth in demand for Google cloud services in India so expanding our footprint in a new cloud region gives us the ability to offer more capacity for growth over many years,”

Google’s first cloud region is located in Mumbai. The cloud region is its 26th in the world and tenth in Asia Pacific. In 2020, Google launched a digitization fund with an investment of Rs. 75,000 crores to boost India’s growing digital transformation and technology adoption. Last month, Google struck a 5G partnership deal with Jio to help people access better and faster internet.

According to IDC, India’s spending on public cloud services had reached $3.6 billion in 2020 as more companies turned to cloud computing as remote work and work from home became the norm in the wake of the pandemic. In the second half of 2020, the revenue from cloud-based infrastructure, platforms and applications touched $1.9 billion. The overall public cloud services market in the country is expected to reach $9.5 billion, growing at a compound annual growth rate (CARG) of 21.5%.

Google Cloud faces tough competition from Microsoft Azure and Amazon Web Services (AWS). In 2015, Microsoft Azure entered the Indian market, and now has cloud regions in Pune, Chennai and Mumbai. The local Microsoft cloud services offer customers data residency, data replication in multiple regions within the country for backup and recovery, private connection to the cloud, reduced network distance and lower latency.

In 2020, Amazon announced its plans to open its second AWS region in Hyderabad which will be operational next year and pledged $2.8 billion to set up the infrastructure. It launched its first region in Mumbai in 2016, with three availability zones.

Oracle has two of its 30 global cloud regions in India, one in Mumbai and the other in Hyderabad are its two cloud regions in India with one availability domain.

Alibaba Cloud, the cloud business of Chinese company Alibaba too has one of its 24 cloud regions in Mumbai, with two availability zones. That’s one of its has 12 cloud regions outside China. Though IBM has a data center in Mumbai, it does not have a full-fledged region in India, but it has six global cloud regions.

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, has revenue for Q4 2020 was $12.7 billion. According to Gartner, the continued trend of increased remote workers will lead to an increase in spending on desktop-as-a-service (DaaS) and infrastructure-as-a-service (IaaS).

Pandemic expedites the cloud shift

Gartner research vice president Sid Nag says that Indian CIOs have already seen the benefits of cloud during the first wave of the pandemic in 2020. “While the pandemic only expedited the shift, it is now clear that to build business resilience and minimize the impact of continued disruptions, investing in cloud is unavoidable,” he says.

Rishu Sharma, Principal Analyst, Cloud and Artificial Intelligence, IDC India too sees the demand for public cloud services accelerating and getting to the “next normal” entails businesses to leverage cloud as part of their business plans. Irrespective

Enterprises across verticals like financial services, IT/ITeS, media, education among others are witnessing a surge in demand,” he states stating IDC’s estimate of 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.

IDC also sees the cloud ecosystem in India maturing, as a new generation of local players that are “born in the cloud” emerge and grow to compete with key cloud providers.

Apart from the fierce adoption of cloud and emerging technologies amongst local businesses, strong support from India’s government has been critical in setting up the stage for its Cloud success. Programs such as Digital India, which aims to transform India into a digitally empowered society and supporting initiatives such as GI Cloud to optimize ICT spending, are kindling both businesses and consumers’ digital readiness and embrace of cloud technologies, services, and experiences, Sharma says.

Addressing local challenges for global leadership

Despite the enthusiasm, if India doesn’t address key challenges in its digital infrastructure and data governance, all its cloud efforts will be futile, believe experts.

Besides fighting external forces such as an ongoing pandemic and increased competition from other markets with established cloud players, the physical connectivity infrastructure or lack thereof continues to be a key challenge in India.

The shortage of fiber optic links, routers and servers to provide access to technologies further leads to a growing digital divide in the country. To resolve this issue, data center operators need to work with multiple telecommunication providers to explore best options to set up good WAN links, from making sure the infrastructure set up remains resilient, adaptable to change and capable of supporting the distribution of users, workloads and different demands of cities. This increased connectivity will also give rise to potentially new data centres, which will further support India’s growing Cloud market.

Robust data policies will also be the key in positioning India as an attractive and trusted location for global companies to invest in for their cloud needs. And finally, the cloud talent gap needs consideration for Indian organizations to equip their existing pool of IT professionals with the relevant skill sets for cloud to thrive in a digital world.

Indeed, India stands a strong chance to become the next big cloud player, with all the right conditions for its growth already in place. To make its next big leap in becoming a global cloud player, India has to address local challenges in its digital infrastructure and data governance and provide an innovation ecosystem for local players to unlock the full potential of Cloud.

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