February 20, 2014

India and the Cloud: Cautious Optimism for Significant Growth


Hostway Team

Map of IndiaThe public cloud market in India was strong in 2013 as businesses of all sizes embraced the cloud’s ubiquitous applications and cost-effective nature. At the end of last year, research form Gartner estimated that public cloud services in India grew at a CAGR of 33.6 percent from 2012 to reach $404 million. Infrastructure as a Service (IaaS) – including cloud computing, storage and print services – proved to be a fast-growing segment, growing at 33.9 percent in 2013 to $59.2 million. Overall, Gartner expects the cloud services market in India to reach $3.9 billion by 2017, with 43 percent of that total ($1.7 billion) being spent on Software as a Service (SaaS). Compared to North America, which Gartner predicts will grow to $250 billion in total cloud spend by 2016, the India market is small, but growing steadily.

Why is the cloud hosting market in India growing so quickly? Two reasons stand out:

  • Like in other regions, Indian businesses – from SMBs to large enterprises – are seeing significant cost savings and a wide variety of applications they can get from the cloud.
  • The Indian economy suffered in 2013, and the rupee was weak against the dollar. With their IT spending capabilities minimized, businesses looked to the economics of the cloud instead of spending on IT hardware.

But while the Indian market was strong in 2013 – indeed, one of the fastest-growing in Gartner’s worldwide cloud forecast – could India have seen even faster cloud adoption? There are three factors that held India back in 2013 that may be resolved in 2014 and 2015:

  • General elections will be held in April, and may help resolve some of the political instability that has gripped the country. A realignment of government initiatives and spending could be seen. But even if no change is forthcoming, businesses will better understand the direction government policies will take, and remove the uncertainty that can paralyze decision-makers.
  • The overall economy is showing signs of growth. At the end of 2013, big company indexes for the country’s two major stock markets indicated signs of stability and potential for reaccelerating growth. Forrester predicts that despite broader challenges in the country’s economy, the wait-and-see attitude that has gripped the economy will ease and Indian IT purchases will grow by 8 percent in local currency in 2014.
  • Companies with big presences in India, such as Infosys and Tata Consulting Services, have been somewhat quiet on the cloud front. If they start making more noise, the market could grow quickly as smaller cloud services companies start beating their own drums more loudly to get attention.

Indian businesses remain poised to take advantage of the efficiencies and cost savings the cloud offers, and the country has already seen tremendous growth in this area. If the political and economic woes that have gripped India for the past year can be resolved in 2014 and optimism for the future grows, more and more businesses will look to the cloud to help fuel their growth. That makes India a place for other countries to watch, learn from and consider how the cloud could impact their own future.

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