This report is co-authored with NASSCOM
Cloud market in India: Present scenario
Despite healthy cloud growth in India, cloud spend (as a % of GDP) of mature markets like US and Singapore are 4-5x compared to India which highlights the low cloud adoption in the country. India’s cloud spending (as a % of GDP) is low compared to some of the BRICS nations as well. As already demonstrated in select domains, e.g., technology first sectors like Fintech, cloud and cloud-based technologies can form the foundation for realizing the Digital India dream.
Cloud adoption varies across cloud natives like E-Commerce, cloud progressives like Financial Services and cloud aspirers like Government or Industrials — Cloud maturity is essential to leapfrog digital transformation across all sectors. A concerted all-round effort can result in a sustained growth of 25-30% of cloud spending over the next five years to reach US$18.5 billion, helping India realize the full potential of the cloud opportunity.
Cloud adoption will be driven by benefits such as:
- Ability to quickly launch new product/ser vice
- Better customer engagement and experience
- Cost optimization/saving
Barriers to cloud adoption include:
- Limited understanding of cloud features and benefits
- Integration of legacy systems/applications and migration
- Lack of in-house capability to drive transformation
Cloud impact for India
Cloud has the potential to account for ~8% of India’s GDP in 2026 growing 4x over the next five years. Key sectors contributing to this GDP growth will be Financial Services, Communication, Media & Entertainment and Industrials. Similarly, cloud has potential to create 14 million jobs in 2026 growing 3x over the next five years.
Cloud can fundamentally enhance industry competitiveness, accelerate innovation and create entrepreneurship avenues in India
- Cloud can enable Industries and Government to reach best in class potential in customer service, productivity, and reliability
- Cloud can facilitate development of superior business offerings, stimulate R&D, and contribute to India’s Global Innovation index
- Cloud can further enhance the entrepreneurial environment in the country helping build and scale new ventures
Building on existing technology prowess, India can position itself as a global hub for cloud services and cloud talent. In order to realize the full benefit of the opportunity, rapid cloud adoption across sectors is essential.
Opportunity cost of slow adoption
If businesses and government are late to cloud adoption, India may stand to lose ~US$118 billion in GDP and 5 million job opportunities by 2026.
In addition, without accelerated cloud adoption end user industries carry the risk of becoming irrelevant and may fall behind in Innovation, Growth and Competitiveness.
Recommendations
Several businesses have started their cloud journey, however, to reach scale and accelerate adoption, timely actions are required from different stakeholders.
To realize the economic and social value for India, stakeholders need to take major initiatives across cloud adoption, talent building and regulatory support.
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Andreas Oberlaender (Principal) and Charles de Pommerol (Principal) contributed to this report.