A new report has revealed that India’s Public Cloud Services (PCS) market is poised for exponential growth, with a projected compound annual growth rate (CAGR) of 23.4 percent from 2022 to 2027.
A public cloud is a third-party managed platform that uses the standard cloud computing model to make resources and services available to organisations using the public internet.
The IDC report revealed that the market revenue for 2022 reached an impressive USD 6.2 billion, encompassing a wide range of services such as infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and software-as-a-service (SaaS). India’s digital transformation journey, steady since the COVID-19 pandemic, has been the primary driver behind this robust growth.
Enterprises across the country are actively driving innovation, introducing digital products and services, and automating processes to stay ahead in the competitive landscape. With a keen focus on improving customer experience, organizations are turning to cloud migration as the preferred path to modernize their IT infrastructure.
SaaS continued to be the largest component of the overall public cloud services market, followed by IaaS and PaaS in 2022, with the top two cloud service providers holding more than 40% of the India public cloud services market, said the research firm.
Despite global macroeconomic headwinds intensifying in the second half of 2022, India’s public cloud services market witnessed robust growth, driven by the accelerating digital transformation among Indian enterprises, and cloud service providers continuing to witness increased demand from small and medium businesses (SMBs) and startups, the study noted.
The report further said that enterprises increasingly availed compute and storage services as part of their IT infrastructure modernisation initiatives, and there was also an increased demand for cloud-based collaborative applications, enterprise resource management (ERM), customer relationship management (CRM), and security software.
Rajiv Ranjan, Associate Research Director, Cloud and Artificial Intelligence at IDC India, emphasised the transformative role of cloud technologies. “Migrating from legacy infrastructure to the cloud has been the most preferred way to modernize IT infrastructure, which is driving public cloud services growth,” he said.
“In the coming years, we can also expect growing adoption of AI technologies, containerized applications, edge computing, serverless computing, and Kubernetes technologies to further enhance efficiency and agility of infrastructure and applications on the cloud,” he added.
Demand for public cloud services was also driven by accelerated AI adoption, with enterprises increasing investments in cloud-based AI platforms, it added.
Harish Krishnakumar, Senior Market Analyst, IDC India, noted that the surge in public cloud adoption is expected to continue in the upcoming years, with more enterprises focusing on digital-first business strategies, with the adoption of technologies like AI/ML, analytics, etc., and cloud-native application development is also gaining momentum.
India is one of the largest and fastest-growing cloud markets with global companies increasingly banking on its potential. Amazon Web Services (AWS) announced its plans to invest $12.7 billion into cloud infrastructure in India by 2030 to meet the growing customer demand for cloud services in India. AWS said that the latest investment will be used to build its cloud infrastructure in India and will support over 100,000 full-time jobs annually. This investment will contribute ₹1,94,700 crore ($23.3 billion) to India’s total gross domestic product (GDP) by 2030.
Google has been expanding its cloud infrastructure in India by building clusters of local data centres and has been making strategic investments from its $10 billion fund allocated to promote digitalisation in India over the next several years. In an interview with Mint in February, Bikram Singh Bedi, Managing Director, of Google Cloud, India, said that India remains a long-term opportunity for Google Cloud.
Last year, Microsoft also said it is investing ₹15,000 crores (approx. $2 billion) in setting up what will be its largest India data centre region in Hyderabad and its fourth in the country after Mumbai, Pune, and Chennai. Microsoft has a network of 160 data centres, organised into 60 data centre regions, globally.
Among the three components of the public cloud services market, SaaS has emerged as the largest, followed by IaaS and PaaS. The dominance of these services is evident, with the top two cloud service providers holding more than 40 percent of the market share.
Despite facing global macroeconomic headwinds in the latter half of 2022, the India Public Cloud Services Market remained resilient, driven by the accelerating digital transformation initiatives among enterprises. Cloud service providers also witnessed increased demand from small and medium-sized businesses (SMBs) and startups, highlighting the market’s potential.
Further, the demand for public cloud services was also driven by accelerated AI adoption, with enterprises increasing investments in cloud-based AI platforms.
Enterprises are expected to prefer an as-a-service model for their IT infrastructure requirements as a way to keep their IT spending in check amidst the challenging economic landscape and also mitigate talent shortages in ITOps, said Krishnakumar.
The report found that enterprises are now increasingly adopting compute and storage services to modernise their IT infrastructure, alongside a surge in demand for cloud-based collaborative applications, enterprise resource management (ERM), customer relationship management (CRM), and security software.
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