The new productivity game-changer

Evolving technology and market demands are fuelling Cloud adoption in India, empowering businesses with enhanced productivity, growth, and efficiency.

The cloud market in India is experiencing rapid growth, projected to have a CAGR of 23.4% from 2022 to 2027. This expansion is primarily fueled by factors such as the widespread adoption of cloud-based services by businesses of all sizes, improved internet connectivity, and the government’s emphasis on digital transformation.

A close look at the changing technology trends and one can observe three major changes in the cloud market in recent years. One, there is a shift from on-premises to cloud-based deployments; two, the adoption of hybrid cloud solutions is on the rise; and three, there is a growing demand for specialised Cloud services, such as artificial intelligence (AI) and machine learning (ML).

Shift from on-premises to Cloud-based deployments: Businesses are increasingly opting for cloud-based deployments due to the cost savings and flexibility offered by cloud computing. By embracing the cloud, companies can save on hardware and software costs, while also being able to scale their cloud resources as required. This shift has become a preferred choice for many organisations seeking enhanced efficiency and reduced IT overheads.

A NASSCOM report predicts that the number of MSMEs using cloud computing in India will increase from 10 million in 2021 to 15 million by 2025.

Adoption of hybrid Cloud solutions: The surge in hybrid cloud solutions adoption addresses the need for businesses to leverage both on-premises and cloud-based resources. This becomes especially crucial for enterprises that must comply with data sovereignty regulations, ensuring sensitive data remains on-premises while benefiting from cloud scalability for other operations. Hybrid cloud solutions provide the best of both worlds, empowering companies to maintain control over critical data while leveraging cloud services for other applications.

Growing demand for specialised Cloud services: The increasing adoption of AI and ML technologies is driving the demand for specialised cloud services that can provide the required computing power and storage capacity. These advanced technologies demand substantial resources that might be challenging to provision on-premises. Cloud-based solutions offer a cost-effective and scalable approach to cater to the demands of AI and ML applications.

CLOUD MARKET IN INDIA

In addition to these three main changes, several other trends are emerging in the cloud market in India.

Growth of the MSME Segment: The Government of India is actively promoted cloud-based solutions for Micro, Small, and Medium Enterprises (MSMEs). Initiatives such as the Startup India program, which provides cloud credits to MSMEs, have significantly contributed to the adoption of cloud computing. A recent NASSCOM report predicts that the number of MSMEs using cloud computing in India will increase from 10 million in 2021 to 15 million by 2025. Leading cloud service providers like Google Cloud have responded by offering tailored solutions specifically designed to meet the needs of MSMEs.

Government’s adoption of Cloud-based solutions: The Indian government has recognised the potential of cloud-based solutions in delivering efficient and accessible public services. Cloud applications have been employed to offer e-governance services, such as online tax filing and e-health records, thereby enhancing citizen experiences. EY’s report suggests that the government’s spending on cloud computing is expected to reach USD 5 billion by 2025, reflecting the significant commitment towards modernising government IT systems. Cloud giants like Amazon Web Services have also introduced cloud solutions tailored for the government sector.

Vertical cloud market growth: Businesses in specific industries are increasingly embracing cloud-based solutions to cater to their unique requirements. For example, the healthcare industry is leveraging cloud computing to improve patient care, reduce costs, and manage critical patient data securely. IDC projects the vertical cloud market in India to grow from USD 1.5 billion in 2021 to USD 3 billion by 2025. Leading cloud providers like Microsoft Azure have introduced specialised cloud services designed for vertical industries like healthcare.

Specific industries such as healthcare, manufacturing, and financial services are adopting cloud-based solutions tailored to their unique requirements.

Increasing adoption of Edge Computing: Edge computing is witnessing a surge in popularity as businesses seek to enhance the performance and reduce the latency of their cloud-based applications. By bringing cloud resources closer to the end users, edge computing optimises data processing and delivery, particularly for users in remote areas. Gartner’s report indicates that the global edge computing market is expected to grow from USD 3.3 billion in 2021 to USD 12.5 billion by 2025. Cloud service providers like Amazon Web Services have introduced edge computing solutions to improve the performance and responsiveness of cloud applications

VERTICALS WITH HOT DEMAND

In addition to the general trends mentioned above, several verticals and segments in India are witnessing a surge in demand for cloud services.

Manufacturing: Companies in the manufacturing sector in India are adopting cloud solutions to streamline production processes, automate operations, and reduce costs. Cloud-based systems enable efficient collaboration among stakeholders, resulting in increased productivity and improved supply chain management.

Healthcare: The healthcare industry is leveraging cloud-based solutions to improve the delivery of care, manage patient data securely, and adhere to strict regulatory requirements. Cloud platforms enable seamless data sharing among healthcare providers, leading to better patient outcomes.

Financial Services: Financial institutions are turning to cloud solutions to enhance risk management practices, automate trading operations, and deliver superior customer service. Cloud-based platforms offer the computational power needed for real-time data analysis and facilitate seamless customer interactions.

Retail: The retail sector is utilising cloud services to enhance customer experiences, optimise inventory management, and deliver personalised marketing campaigns. Cloud-based retail solutions help retailers gain insights into customer preferences, enabling them to tailor their offerings effectively.

E-commerce: Online businesses are scaling their operations with cloud-based solutions, improving customer service, and safeguarding customer data. Cloud platforms provide the required infrastructure for handling fluctuating demands during peak seasons while ensuring data security.

The cloud market in India is experiencing remarkable growth, driven by factors such as the shift from on-premises to cloud-based deployments, the adoption of hybrid cloud solutions, and the growing demand for specialised cloud services. Additionally, several verticals and segments, including manufacturing, healthcare, financial services, retail, and e-commerce, are witnessing significant demand for cloud-based solutions.

As technology continues to evolve, the cloud market in India is expected to further expand, presenting even more opportunities for businesses to leverage the power of cloud computing for enhanced productivity and growth.

By Dr. Yogesh Shete

The author is Head of Strategy (International Hubs), NatWest Group.

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