Market research company IDC has forecast that the Indian public cloud services market will grow at a compound annual growth rate (CAGR) of 22.2% between 2020 and 2024. This will amount to revenues of $7.4 billion by 2024, up from $1.6 billion in the first half of 2020, according to IDC’s Worldwide Semiannual Public Cloud Services Tracker.
To quote Ashwin Kumar, director of data centre and cloud operations at global cloud provider Linode, the phrase that comes to mind when describing India's cloud market is, “insatiable growth”..
It is therefore no surprise that with so much potential growth, the burgeoning Indian cloud market has one of widest and most varied mix of cloud players.
Some of the biggest names include well-known global hyperscalers like Amazon Web Services, Google Cloud, Microsoft Azure and IBM. “The availability of native cloud services and the attractive financial total cost of ownership swung the pendulum in favour of these international players,” explains Manoj Karanth, head of data and intelligence at Mindtree, a global IT consultancy.
Other cloud providers in the space include Alibaba, Oracle, Airtel, Digital Ocean, Cisco Systems, CtrlS, Sify, VMware, Yotta Infrastructure and NTT, to name just a few. However small their market share, it’s these small to medium cloud players that add much needed diversity to the market in India.
“Alternative cloud providers are driving innovation with developers and small businesses already. There is a large pool of businesses where having price performance choice will spur a larger, more vibrant ecosystem. This will keep competition in the market,” says Kumar.
Overall, it is the market size, range of enterprises and rapid uptake of digital services that makes India the real hot ticket item in the cloud space.
“India is the second-largest market for cloud services in the APAC region, and it is a unique market,” continues Kumar.
“The country is moving ahead rapidly, led by digital acceleration caused by the pandemic, rapidly increasing internet penetration, a large base of untapped customers, and a thriving start-up ecosystem. Another unique feature of the Indian market is the small and medium-sized businesses that are the largest contributing sector to the country's GDP.”
In the case of Yotta Infrastructure, this enterprise market is seen as so promising that the company recently launched its Yotta Enterprise Cloud in tandem with its Let’s Get Cloud initiative, offering cloud computing platform to everyone, from first time users, bootstrapped start-ups and large enterprises, to indie developers — “basically everyone can access cloud environment without any hassles or obligations,” says Sunil Gupta, co-founder and CEO of Yotta Infrastructure
As in much of the world, Covid-19 has played a major part in the adoption of the cloud. In India this is particularly true among its enterprises which are at an early stage of cloud adoption compared to global counterparts.
Uday Chaudhari, senior director of technology at digital IT consulting firm Synechron, commented: “Public cloud delivered on its promise of scalability, cost efficiency and business resilience for Indian enterprises during this critical time in 2020. With the paradigm shift of working remotely becoming the new normal, public cloud will become a mandatory technology for enterprises across the world.”
In addition, the pandemic also brought with it a change in the way security is managed, moving away from traditional physical infrastructure to software-driven automation.
“The real estate-based working model has seen a drastic downtrend and it has negatively impacted the traditional way of data storage and network access in offices or data centres where hardly anybody could access,” says Dipesh Ranjan, managing director and vice president of NetFoundry APAC.
“This has further propelled revolution to cloud security and connectivity, shifting the entire networking landscape to cloud nativity and zero trust cloud orchestration.”
With this in mind, one of most talked about new technologies is secure access services edge (SASE), a topic that came up during Edge Global Week in January 2021.
During his presentation, Joe Baguley, vice president and chief technology officer EMEA at VMware, said that SASE “is really going to change how people access data and more importantly it's driven by people having a need for speed… what we're doing is we're taking technology that traditionally was kept in someone's data centre, essentially authentication. We're taking those functions that currently run in those DMZs and we're pushing them out to these SASE points of presence.”
Speaking to Ranjan on its place within the Indian cloud market, he echoed these same sentiments, saying that SASE is becoming the norm “…integrating WAN capabilities, web security, endpoint security with a cloud-native security model like zero trust network and application access. This has been a component and serves as an opportunity for resilient organisations in India and around the globe to build their cloud strategies with further emphasis on zero trust security.”
In keeping with the topic of security, although software-driven technologies like SASE will certainly make things easier to manage, we can’t forget fundamental steps that require human diligence and care.
“Ensuring security is a collective responsibility,” explains Kumar. “Some best practices for securing data on the cloud are to carry out due diligence with your vendors, evaluate a migration plan, ensure proper authorisation for logins and access, monitor user activity, and maintain a data backup and recovery account. Security is usually offered in layers, hence it’s key to be sure to select the offering which best safeguards your architecture.”
Identifying other best practices that can help customers ensure data integrity, confidentiality and availability in the cloud, Synechron’s Chaudhari points to factors such as implementing the least privilege model, auditing activity across your environment, categorising your sensitive data, using data masking techniques such as encryption, and making sure your cloud provider offers an SLA that meets your availability requirements..
Directly linked to the success of such security plans are the use and deployment of new technologies such as IoT and AI, which have also contributed to the overall growth of the cloud market in India.
“Covid-19 has pushed the organisations’ boundaries to explore AI,” says Rishu Sharma, principal analyst for cloud and artificial intelligence, IDC India.
“Businesses are now looking at intelligent solutions to tackle issues associated with business continuity, labour shortage, productivity and workspace monitoring etc. According to IDC's Worldwide Artificial Intelligence Spending Guide forecast, India's AI spending will grow from $300.7 million in 2019 to $880.5 million in 2023, at a CAGR of 30.8%.”
Yotta’s Gupta sees AI, machine learning and IoT continuing to grow at pace, which in turn will lead to the proliferation of the as-a-service business model.
“We believe that with more and more services being delivered on cloud, providing virtual access to everything and emerging technologies like AI/ML and IoT playing a critical role in building these services, ‘Everything-as-a-Service’ will gradually become an imperative for a truly digital-native enterprise,” he says.
“Consuming everything on an ‘As-a-Service’ model will make sure that businesses are not only scaling up or down faster but also delivering new and innovative services and seamless customer experiences.”
So, with all this demand and opportunity in the space, we can only assume that the investment landscape for cloud infrastructure must be at an all-time high.
Mindtree’s Karanth says that he sees private equity leading the charge but at the same time, “the government is also investing in cloud, from both a security and equity perspective.”
Specifically, the government has been developing its Digital India programme, which has the aim of accelerating the country’s digital transformation. More recently, the Government launched GI Cloud, to deliver electronic services in the country and optimise government ICT spending.
“The Indian government in that sense recognises the rising digital capabilities, improving connectivity, which if done right can transform every industry and catalyse its goal of becoming a $5 trillion economy,” Kumar says.
In the case of Yotta, Gupta shares that the company has already invested INR1000-1200 crore ($200 million) in cloud hosting and colocation services, with plans to spend a further $2 billion over the next five to seven years to build out its digital infrastructure, including cloud, data centre and managed services.
According to EY’s Tech Horizon report from 2020, cloud technologies continue to get significant amounts of investment from organisations in India and Europe (64%), followed by spends on the Internet of Things (51%).
But in support of this, the regulatory environment has been also been geared towards further investment, with favourable market conditions.
In Paul Budde Communication’s focus report on India it claims that, ”state governments in the country are attracting foreign direct investment through tax incentives. Maharashtra, Andhra Pradesh and Telangana have announced incentives for data centre development in the last two years.”
This was further supported in a report by property consultancy firm JLL, which found India’s data centre is expected to present a $4.9 billion investment opportunity, following a tripling of data centre capacity by 2025.
Capacity is predicted to increase from approximately 375MW to 1,078MW by 2025, due to increasing adoption of new technologies and data sovereignty laws.
“Mumbai is expected to see highest capacity addition, as it continues to be the preferred choice for large cloud players because of its infrastructure advantage,” said Dr Samantak Das, chief economist and head of research and real estate intelligence services at JLL.
With Amazon set to invest $2.8 billion in Telangana for its second cloud region in the country and SAP pledging $68.6 million (500 crore) to localise and offer its customers a multi-cloud choice in India, as well as the reports that India experienced more than 14 data centre investments in 2020 alone, it’s fair to say that this trend will only continue as we venture into 2021.
The diverse mix of public vs private, global vs domestic, and enterprise vs wholesale offerings means that it’s India’s ecosystem that truly sets it apart from other parts of the world, and “as the ecosystem matures, and with the combined focus of the government and private players alike, ‘born in the cloud’ is likely to be the de facto way for business in India,” says Kumar.
