India’s cloud computing market is estimated to exceed USD 7.1 Billion by 2022, which is three times the current market size in the country. The cloud computing market in India is currently estimated to be USD 2.5 billion in 2018, dominated by Infrastructure as a Service (IaaS) & Software as a service (SaaS) players. It is expected to grow at a CAGR of about 30 per cent.
This was revealed in a report ‘Cloud — Next Wave of Growth in India’, released by the National Association of Software and Services Companies (NASSCOM) in collaboration with Google Cloud and Deloitte Touche Tohmatsu India LLP.
Infrastructure as a Service (IaaS) spending in India is estimated to grow at 25 per cent per annum from around USD 1 billion in 2018 to reach USD 2.3–2.4 billion in 2022. The Indian Software as a service (SaaS) market is expected to grow at 36 per cent per annum to reach USD 3.3–3.4 billion by 2022.
Globally, the cloud spending on IT is growing at 16.5% (CAGR) and is expected to touch USD 345 billion by 2022. In 2018, cloud spends in India were approximately 6 per cent of the total IT spend. In the period from 2016 to 2018 the cloud spend in India registered a CAGR of 40.2 per cent, coming second after China.
The report highlights that cloud spending is on a growth trajectory propelled by factors (both demand and supply) such as: Increased awareness of Cloud, consumerization of IT, proliferation of start-up ecosystem, diverse landscape of supplier ecosystem, rising investments in infrastructure, talent, strategic partnerships and the impetus from key digital-led Government programs. And here, both IaaS and SaaS are estimated to contribute to this growth. Factors that can drive the IaaS uptake in India are — an improved infrastructure, economic benefits, increased innovation, vibrant start-up ecosystem and connected ecosystem. On the other hand, lower cost of workforce, abundant talent availability, mature sales eco-system, adoption of newer technologies like AI, ML to build world-class products will boost the SaaS ecosystem.
To accelerate the cloud growth momentum in the right strategic direction, the report recommends the government of India to set out tangible time-bound targets for cloud and a sharper focus on the multitude of other infrastructural & operational factors (reliable power, sustainable land regulations, high-speed connectivity).
It draws attention to challenges such as data security and lack of internet infrastructure specially in Tier-II and rural markets of India. However, holistically cloud spending is catching up fast and some of the key drivers are consumerization of information technology, availability of skilled talent with deep domain knowledge, rising investments in infrastructure, government initiatives in support of cloud computing, emerging technologies such as AI (Artificial Intelligence) and ML (Machine Learning) and impetus from key digital-led Government programs enabling cloud growth among others.
This report also shares a few recommendations to further strengthen the cloud market in India:
- Drive awareness amongst enterprises about Cloud technology
- Consideration on the impact of Data localization
- Strict compliance with data privacy laws
- Enforcement of Data protection bill
- Nurture advanced skill development
- Strengthen the internet and power infrastructure
- Incentivize MSMEs for cloud adoption
- Enable ease of operations for data center setup
“India’s cloud computing market is poised for growth and, the technology is increasingly being embraced across businesses as well as consumers. Complementing the ecosystem are the futuristic technologies such as Artificial Intelligence, Machine Learning, Advanced Analytics and Immersive media that are aiding in the seamless adoption of SaaS, IaaS and PaaS offerings. However, to bolster India’s cloud market story we need to exercise innovation. Innovation to reduce the cost of services and thus, a wider usage of cloud. This report will be a ready reckoner for all to understand the imminent need for Cloud and the underlying opportunities,” said Debjani Ghosh, President, NASSCOM.