Public cloud spending by global firms to grow 20.7% in 2023: Gartner

Public cloud spending by global firms is forecast to grow 20.7% to total $591.8 billion in 2023, up from $490.3 billion in 2022, according to the latest forecast from Gartner. This is higher than the 18.8% growth forecast for 2022, the analyst firm said. 

Infrastructure-as-a-service (IaaS) is forecast to experience the highest end-user spending growth in 2023 at 29.8%. The platform-as-a-service (PaaS) and software-as-a-service (SaaS) segments too will still see continued growth, with Gartner forecasting 23.2% growth for PaaS and 16.8% for SaaS in 2023. 

“Current inflationary pressures and macroeconomic conditions are having a push and pull effect on cloud spending. Cloud computing will continue to be a bastion of safety and innovation, supporting growth during uncertain times due to its agile, elastic and scalable nature,” said Sid Nag, Vice President Analyst at Gartner. 

Despite growth, profitability and competition pressures, cloud spending will continue through perpetual cloud usage, as Nag said, “Cloud migration is not stopping”. 

He explained that IaaS will naturally continue to grow as businesses accelerate IT modernisation initiatives to minimise risk and optimise costs. “Moving operations to the cloud also reduces capital expenditures by extending cash outlays over a subscription term, a key benefit in an environment where cash may be critical to maintain operations,” he said. 

“Once applications and workloads move to the cloud they generally stay there, and subscription models ensure that spending will continue through the term of the contract and most likely well beyond. For these vendors, cloud spending is an annuity — the gift that keeps on giving,” Nag noted. 

As per a June 2022 report by International Data Corporation (IDC), the overall public cloud market grew 29.0% year-over-year in 2021 with revenues totalling $408.6 billion. 

The research firm showed that spending continued to consolidate in 2021 with the combined revenue of the top 5 public cloud service providers (Microsoft, Amazon Web Services, Salesforce Inc., Google, and SAP) capturing nearly 40% of the worldwide total and growing 36.6% year over year. With offerings in all four deployment categories, Microsoft captured the top position in the overall public cloud services market with 14.4% share in 2021, followed closely by Amazon Web Services with 13.7% share. IDC too sees that the trend is 

“The last few years have demonstrated that in challenging times, businesses increasingly rely on cloud services to modernise their operations and deliver more value to customers,” said Dave McCarthy, research vice president, Cloud and Edge Infrastructure Services.   

The cloud momentum is growing across region. For example, in India the public cloud services revenue that totalled $4.6 billion for 2021 (July-December). The overall Indian public cloud services market is expected to reach $13.5 billion by 2026, growing at a CAGR of 24% for 2021-26, it said.  

“This trend is expected to continue as public cloud providers offer more ways of extending cloud services to on-premises datacentres and edge locations. These expanded deployment options reduce many barriers to migration and will facilitate the next wave of cloud adoption,” McCarthy said.