India’s booming start-up landscape has grown in the last five years third largest in the world with more than 78,000 Department of Industry and Domestic Trade Promotion (DPIIT) recognized startups from all 36 states and union territories (UTs) in 644 districts covering 56 industries. In 2021, as India began to break out of back-to-back pandemic-related lockdowns, it witnessed the recognition of over 20,000 startups in 2021.
The pandemic has acted as a catalyst and accelerated the adoption of cloud services in India. The “cloud” refers to servers accessed via the Internet and the software and databases running on those servers. Increasing digital transformation has put cloud adoption in the spotlight in the do-anything-from-anywhere world.
Cloud is the way forward, with predictions that over 95 percent of new digital workloads will be deployed on cloud-native platforms by 2025, up from 30 percent in 2021. According to a Boston Consulting Group (BCG) report India is one of the largest and fastest growing public cloud markets in the Asia Pacific (APAC) region.which will see triple growth from $2.6 billion to $8 billion between 2018 and 2023.
Important market drivers
- The Indian startup ecosystem is booming thanks to monetary and non-monetary support from the government’s Startup India Initiative and the availability of skilled information technology (IT) personnel. Start-up companies appear here as cloud service consumers (Ola Cabs, Bigbasket) and cloud service providers (like Practo and Freshdesk). Therefore, the increasing number of startups is driving the deployment and adoption of cloud services.
- Digitization in India enables artificial intelligence (AI) and virtual reality (VR) business operations. Cloud computing is the primary force enabling organizations to store, manage, and analyze the vast amount of data required for AI applications.
- The smart appliance and wearables industry is booming. Cloud computing is the main mechanism for communicating and storing information in such devices.
- Government initiatives such as MeghRaj and Cloud Vision for India 2022 have established India as a global hub for cloud computing and are providing impetus to improve the adoption of e-governance initiatives using the cloud
- The National Digital Communications Policy 2018 aims to establish India as a global hub for cloud computing, hosting and content delivery, and data communications systems and services by establishing regulatory frameworks, data centers, delivery networks and internet exchanges
- Cloud services have improved governance in India as national initiatives and programs such as Swachh Bharat Mission, Government e-Marketplace (GeM), e-Hospital, My-Gov and e-Transport are now cloud-based
- The government introduced DigiLocker, a cloud-based platform for issuing, sharing and verifying critical lifetime documents or certificates. As of March 2022, DigiLocker had more than 101.1 million users and 4.94 billion documents issued
Undoubtedly, the move to the cloud is being driven by its incredible business benefits – from resiliency, speed and mobility to scalability. Together, these culminate in unlocking innovation, operational efficiencies, real-time analytics, and cost savings across industries, positioning organizations for successful digital adoption.
So what explains this cloud ubiquity in the industry?
The “Trillion Dollar Paradox”: Putting the long-term cost of cloud in perspective
Even as companies turn to the cloud, there has been increasing speculation recently about its long-term cost implications.
An article published by Andreessen Horowitz (an American venture capital firm) drew attention to the impact of the cloud lifecycle on a company’s finances, calling it the “trillion dollar paradox”. While the cloud remains profitable early in its adoption, its cost far exceeds the return on investment (ROI) it provides as a business evolves, scales, and slows its growth pace.
The revelation is prompting companies across the board – from startups to established companies – to reconsider their cloud spending and strategies.
The cloud enables startups to shift gears and meet changing market dynamics by overhauling processes, culture and customer experiences; it is at the heart of successful digital acceleration. Proper use of the cloud is paramount to unlocking the best of both worlds – cloud benefits while keeping costs low.
Especially in the case of start-ups, since the focus is on building the business instead of putting energy into the IT infrastructure, the public cloud seems to be a perfect solution. However, various alternatives are more cost-effective and allow startups to put their funds into growing their business. Studies have shown that workloads running 24/7 on a public cloud for around eight months cost the same as owning the infrastructure with 36 months of support, including operational costs.
Therefore, startups must define a strategic hybrid or multi-cloud roadmap and consider the right placement of workloads based on access requirements, security and control, uptime, capabilities, complexity, business goals, and other factors.
For example, dynamic and geographically distributed workloads benefit more from the cloud’s auto-scaling capabilities. In contrast, consistent workloads like test and development that run 24/7 may not be ideal candidates for the public cloud.
Additionally, costs associated with early data policies and retaining IT professionals with relevant skills could further drive cloud costs.
It must be recognized that India today has an opportunity to become the next big cloud player, aided by the strong adoption of cloud technologies in its business ecosystem. To make the next big leap, it needs to rethink its spending strategies, from government macro spending on cloud infrastructure to corporate investments in cloud services. An innovation sandbox for local players to unlock the full potential of cloud with unit cost and ROI will surely help India rewrite history as the largest cloud market.
This was written by StartupIndia, Raunaq Jaisinghani and Dell India.