5th October 2011

The second instalment in our series on emerging markets looks at the cloud computing industry in India, with a focus on how IT providers, in a country with the world’s second highest population, are working on turning the hype surrounding cloud into something more substantial.

Cloud conscious - the Indian IT industry
Chris Ward, Editor, Business Cloud News

Back in December 2010, IDC published a report declaring that the Indian cloud computing market was set to rocket in annual growth – 40% by 2014 from its (then) estimated value of US$66.7 million.

So, has the market started fulfilling its potential, nine months on from this report? And what is the country’s current position in terms of cloud adoption? Which companies are in the best position to dominate?

Firstly, it’s important to assess the current state of hype, which appears to still be there; especially if the Cloud Computing World Forum India is anything to go by. Taking place on 12th October in Mumbai, it recently declared its 1,000th registered delegate, which is an impressive prospect considering this is the first World Series event to grace Indian soil, and considering the Forum was initially designed to cater for around 500 of the country’s top IT decision-makers.

But beyond the potential debates that will take place next week, it’s also evident the market is evolving alongside the hype - encountering similar problems and issues to other, more established regions, and seeing similar areas of business take to certain services quicker than others, too.

One element key to helping the cloud industry grow in India has been the huge explosion of smartphone usage in the region. Although accurate figures are still hard to come by, some research suggests there are as many as 771m mobile users currently residing in India, and perhaps more importantly to the development of the cloud industry, almost 30m mobile internet users.

With high-speed, mobile internet such an important aspect of cloud computing, uptake in smartphone usage is booming in India, and according to a recent article in The India Times, leading to more advanced internet usage among all aspects of the country:

“The poor will be the greatest long-term beneficiaries of cloud computing because it eliminates the cost barriers to accessing the digital age. People can opt to use the most basic hardware, amounting to little more than a keyboard and screen. 

“All of this is premised on internet connectivity. Here again, the poor can piggyback on the rich. As more people armed with computers move to areas without internet or with poor connectivity, it is in the interest of providers to expand and enhance networks to serve customers better. Not only does cloud computing close the digital divide, consumers too benefit because accessing larger markets will spur corporations to innovate even more.”

The vast improvement of internet connectivity is also leading to the staggering expansion of SMEs across the country. On last count, there were said to be around 12m MSMEs (micro, small and medium-sized enterprises) in India, representing a workforce of over 60m.

Of these SMEs, it has been stated that 57% are using the web as a direct sales channel. The importance of small business cannot be underestimated, and nor, according to one of the country’s leading CTOs, Shoppers Stop’s Arun Gupta, can their potential uptake of cloud services:

“In the next 5 years I believe we will see many enterprises using a hybrid model with public and private clouds. SME and startups will leverage the cloud quicker than the large enterprise. Most functions and processes that can be enabled using the Internet or Mobile would move out of the data centre into the cloud.”

Cloud computing providers have been quick to react. Several large US companies such as Google and Symantec have already taken big steps into the Indian market, with Google debuting its paid-for Google Apps service in May of this year and seeing a number of large-scale, as well as SME customers, moving over, including Indiamart, Punj Lloyd and even the Indian Youth Congress.

Indian IT providers are also in a good position to profit from the potential shift to cloud computing, with NetMagic, India’s largest hosting services provider “well poised to make inroads” according to Arun Gupta, and also Tata Communications, who already have eleven state-of-the-art data centres running in India, capable of offering enviable levels of provision for cloud service providers and hosting across the country.

However, while the potential is massive, one key element affecting uptake of cloud computing is still, like almost everywhere else, the issue of security. A recent survey undertaken by Trend Micro, a global cloud security provider, stated that almost 55% of IT decision-makers in India had reported a security issue with their cloud provider within the last 12 months, while over 60% stated they were holding back from using cloud due to security-based apprehension. 

And while the anxiety remains, Arun Gupta believes this has simply meant for a more watchful approach to cloud services, for many Indian companies:

“Indian businesses have [so far] been cautiously optimistic about the public cloud, with the starting point for most has been SFA and email/collaboration with many start-ups leveraged AWS, and Google Cloud. The issues are bandwidth cost and ability to successfully deploy hybrid models.”

But with bandwidth improving all the time thanks to the mobile market and many start-ups less concerned about the potential of security threats than more established large-scale companies, cloud computing looks set to continue its march towards the figures estimated by IDC last year.

As Ezhil Arasan Babaraj, Research and Development specialist for CSS Labs, put it so well in a recent article about India’s cloud computing future:

“India, as a country with a huge population base, has never been given adequate resources to embrace innovation. The case is even worse if you are an individual who wants to gain access to the latest technologies for your research and development needs. But cloud computing addresses this challenge to a great extent and provides access to the necessary resources to satisfy your IT needs in an affordable way.”

Chris Ward, Editor, Business Cloud News

Next stop for BCN's series on emerging markets - the Chinese cloud.
To register for the Cloud Computing World Forum India, visit www.cloudcomputinglive.com/india

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Tags: platform as a service | mobile cloud | cloud security