Companies continue cloud spends despite global slowdown

Cloud remains a long-term investment priority for 70% of major corporations despite macro headwinds and the recent slowing of growth of global cloud providers, according to a new research report published on Thursday by IT services company, Tata Consultancy Services (TCS).

The report titled ‘Connected Future: How Cloud Drives Business Innovation’, which was the result of a global survey of 972 senior executives, including India, found that innovation is a major driver of cloud investment, as six out of 10 CXOs stated that cloud is crucial as a catalyst for innovation that will shape their organisation’s future.

This appears particularly true for artificial intelligence (AI), with 75% of respondents invested in AI and machine learning capabilities over the past two years, while 78% plan to do so over the coming 12-24 months. Both technologies are highly dependent on access to large amounts of data and scalability through the cloud, the report noted.

Notably, more than a third of respondents (37%) have made progress in their goals for cloud-enabled innovation in the form of new business models, underlining the growing power of the cloud to drive new revenue.

“A desire for greater efficiency, resilience, and flexibility drove early cloud adoption, and these remain critical factors. Businesses now more fully understand how cloud drives business growth and innovation for the long-term, and for most, the journey is only just getting started,” said Krishnan Ramanujam, President, Enterprise Growth Group, TCS.

But despite significant progress in recent years, the study reveals that businesses still have a long way to go to unlock the full power and potential of cloud. For example, the study noted that 66% of respondents are still in the earliest stages of transition towards mature digital ecosystems.

Besides, critical skills shortages continue to affect businesses in the cloud space, with over half (52%) of respondents reporting a lack of full cloud proficiencies in-house, the study said.

“Cloud is a frequent source of short-term ROI anxieties, but growth and transformation is a long game. Reconciling these two realities is a challenge and a necessity, but fully achievable with the right strategy and planning,” said Ramanujam.

“This is critical because the cloud is now the unifying digital fabric of every enterprise, fuelling powerful technologies—from generative AI to edge and quantum computing—and is ushering the next wave of innovations now and into the future,” he added.

Not just TCS, another report released on June 1, by market research firm International Data Corporation’s (IDC) also noted that public cloud service revenue in India is estimated to reach $17.8 billion by 2027, growing at a CAGR of 23.4% for 2022-27, on the back of growing digital transformation initiatives by the enterprise.

Harish Krishnakumar, Senior Market Analyst, IDC India, noted in the report 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 also gaining momentum.

India is one of the largest and fastest-growing cloud markets with global companies increasingly banking on its potentials. In April, 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.

Google too 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. Last year, Microsoft also said it is investing ₹15,000 crore (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.