Cloud-based connectivity has witnessed considerable uptake in recent years due to its capacity to provide computing resources that are flexible, scalable and cost-effective. Since cloud connectivity has transformed the way organisations operate, the global cloud computing market is expected to witness considerable growth in the next few years. According to a report by Oliver Wyman, co-authored with the National Association of Software and Service Companies, cloud technology is predicted to contribute 8 per cent to India’s GDP by 2026, potentially boosting it by $310-$380 billion.
Industry estimates suggest that telecom operators alone will invest $26 billion in cloud services in 2024, with expenditure growing to $65 billion in 2028. This, combined with the enterprise cloud opportunity, represents a substantial growth avenue for stakeholders operating in the cloud domain.
Market trends
According to a report by International Data Corporation, worldwide revenue for the public cloud services market totalled $669.2 billion in calendar year 2023, an increase of 19.9 per cent compared to 2022. The report noted that the largest source of public cloud services revenue in 2023 was software-as-a-service (SaaS) applications, which accounted for nearly 45 per cent of the market total. In addition, infrastructure-as-a-service (IaaS) was the second-largest revenue category, accounting for 19.9 per cent of the total, while platform-as-a-service (PaaS) and SaaS–system infrastructure software delivered 18.4 per cent and 17 per cent of overall
revenue respectively.
As per the report, global public cloud services revenue will surpass $800 billion in 2024, an increase of 20.5 per cent over 2023, with a similar increase expected in 2025. While the annual rate of growth will slow down slightly over the forecast period, the market is still projected to deliver a five-year compound annual growth rate of 19.5 per cent, with worldwide revenues reaching $1.6 trillion in 2028.
Adoption scenario
As the demand for cloud computing grows, key players in the market have established new data centres in major cities such as Mumbai, Chennai and Hyderabad to meet the growing demand for cloud computing. In addition, start-ups have begun adopting a cloud-only policy, abandoning traditional in-house infrastructure for agility and rapid scalability.
According to the global enterprise cloud index survey by Nutanix, 99 per cent of IT professionals in India are focused on adopting a cloud-smart approach in their infrastructure strategy. Enterprises across domains are also adopting a cloud-first strategy to benefit from cost efficiency. For instance, in the education domain, Byju’s Educational Services is leveraging cloud services to provide interactive and personalised learning experiences to students. This enhances user engagement through adaptive learning and ensures rapid content delivery across various regions. Similarly, in the healthcare domain, Narayana Health has integrated cloud technology to streamline operations and improve patient care. In the retail segment, Reliance Retail has implemented a cloud strategy to transform its retail operations and uses cloud solutions for inventory insights and customer relationship management, and analytics, enhancing customer experiences through personalised marketing, improving inventory management with real-time insights and augmenting operational efficiencies.
The government has also been actively encouraging the adoption of cloud. To this end, the Ministry of Electronics and Information Technology has launched MeghRaj, also known as GI Cloud, to leverage the benefits of cloud computing. The department is working to promote cloud adoption across various agencies and streamline processes. The initiative emphasises using the cloud service offerings of major communication service providers for easier procurement by government departments.
Rise of private cloud
A rising trend in the cloud computing domain has been the adoption of private cloud, which is a solution where a single tenant has exclusive access to all cloud resources. In short, instead of sharing the server infrastructure with multiple global companies, you have your own dedicated cloud.
While pay-as-you-go pricing models for public clouds are initially appealing, the hefty bills received later pose a challenge. Moreover, these services sometimes have hidden charges due to bandwidth requirements. For instance, as per an industry study, 76 per cent of companies that use multiple clouds struggle to control their cloud spending. In contrast, private clouds allow organisations to opt for a predictable cost model with lower expenses compared to public clouds.
Another major advantage of private cloud is that companies can double down on security from the outset via its dedicated structure, which has fewer attack surfaces.
Correlation between cloud and AI
Cloud infrastructure plays a significant role in making artificial intelligence (AI) available to the masses. AI models, such as the large language model that powers ChatGPT, are trained on huge amounts of data, using vast amounts of computing power. Most businesses do not have the resources to do this themselves, and therefore, access AI-as-a-service through cloud platforms. Through this, they can leverage the powerful and transformative benefits of AI technology.
The rising adoption of private cloud is propelling the growth of AI adoption. Private cloud can power AI-based systems since it can store, process and put machine learning (ML) algorithms to use. Further, using AI-based solutions inside the private cloud can help in resource allocation, database security and cost optimisation. For example, AI can help security tools look past the noise and identify anomalies that contemporary solutions might miss.
Sustainable cloud computing
In tandem with other segments, cloud computing is also turning sustainable through the rise of green cloud initiatives and net zero commitments. All big cloud service providers have made net-zero commitments, not just for their own operations but also to help customers reduce their carbon footprints.
As per industry estimates, a notable surge in green cloud computing is expected, signalling a significant shift towards energy-efficient data centres, increased use of renewable energy sources and the integration of carbon credit trading within cloud ecosystems. This strategic emphasis on environmental sustainability marks a pivotal shift as companies aim to enhance their green credentials, comply with stringent regulations and manage broader climate-related risks effectively.
The road ahead
In the coming years, the growing adoption of AI and generative AI (GenAI) is expected to propel the demand for cloud services even further. As per a report by Gartner, worldwide end-user spending on public cloud services is expected to grow 20.4 per cent to $675.4 billion in 2024, up from $561 billion in 2023. The report noted that this growth is being driven by GenAI and modernisation of applications.
It stated that all segments of the cloud market are expected to witness growth in 2024, with IaaS forecasted to experience the highest end-user spending growth at 25.6 per cent, followed by PaaS at 20.6 per cent. IaaS adoption will continue at a robust rate, reflective of the GenAI revolution that is under way. The need for infrastructure to facilitate AI model training, inferencing and fine-tuning has been growing and will continue to do so exponentially, having a direct effect on IaaS consumption.
While cloud infrastructure and platform services will drive the highest spending growth, SaaS remains the largest segment of the cloud market in end-user spending. SaaS spending is projected to grow 20 per cent to $247.2 billion in 2024. The report emphasised that spending on SaaS is being driven by independent software vendors modernising their applications to run within a SaaS-based consumption model. Organisations are increasingly using cloud for specific use cases such as AI, ML, internet of things and big data, which is driving SaaS growth.
