India's revolution in cloud computing and data

India is undergoing a shift from an emerging to a developed market economy, and advanced technology is expected to play a significant part in this process. By 2047, India is expected to be an economic superpower with an estimated GDP of US$ 26 trillion. It is also expected to be home to the world's largest, youngest, and most digitally savvy population by 2023. There would be 1.64 billion users who would want digital services. With over a billion mobile phones and over 700 million internet connections, India has seen exponential growth in digital commerce, digital entertainment, and social media use. India's mobile data consumption (in 2022) is the highest in the world and is steadily rising. The digital economy in India is expected to rise from US$ 200 billion in 2017-18 to a whopping US$ 1 trillion by 2025. The magnitude of India's digital population and the trajectory of the digital economy needs a rapid expansion of Data Centres. The cloud computing scope in India has evolved from a facilitator to a catalyst that promotes creativity, adaptability, and corporate expansion.

India is becoming a more digitally empowered society and knowledge-based economy because of the acceleration of economic reforms, increased use of digital technologies, and numerous Digital India initiatives like Digi Locker, e-governance, Unified Mobile Application for New-age Governance (UMANG), mobile e-health services, digital finance services, and others. According to a report by Oliver Wyman and NASSCOM, cloud technology will account for 8% of India’s GDP by 2026. It has the potential to boost the country's GDP by US$ 310-380 billion by 2026, while also producing 14 million employment. A concentrated all-around effort can result in a continuous 25-30% increase in cloud investment over the next five years (2022 onwards) to reach US$ 18.5 billion, assisting India in realising the full potential of the cloud market.

Cloud Computing in India

Cloud computing is classified into three types: public cloud, private cloud, and hybrid cloud. There are four key services within these deployment models: Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Software as a Service (SaaS), and serverless computing. A Data Centre is a specialised secure facility within a centralised location that houses computing and networking equipment for the purpose of gathering, storing, processing, distributing, or providing access to massive volumes of data. According to a report by Oliver Wyman and NASSCOM, India's public cloud spending has the potential to expand at a CAGR of 27% over the next five years (2022 onwards) because of increased spending in IaaS and PaaS services in line with global markets.

Note: E-Estimated; Infrastructure as a Service (IaaS); Platform as a Service (PaaS); Software as a Service (SaaS); Other segments like Business Process Services (BPaaS), Desktop as a service (DaaS), Disaster Recovery as a Service (DRaaS) and Cloud Management & Security Services.

Source: Oliver Wyman, NASSCOM

Types of cloud service providers

• Hyperscalers

Large cloud service providers (CSPs) that offer services like computation and storage at enterprise scale. For example- Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform (GCP), etc.

• System Integrators

A company that specialises in implementing, planning, coordinating, scheduling, testing, enhancing, and sometimes maintaining IT systems. For example- Deloitte, IBM, Accenture, TCS, etc.

• Infrastructure providers (Data centres)

They assist businesses that require physical data centres but lack the capability or necessity to construct their proprietary physical sites. For Example- AdaniConneX, CapitaLand, CtrlS, etc.

• Pure play SaaS providers

They provide exceptional customer service through subscriptions. SaaS offers a complete application stack as a service that clients can access and utilise. SaaS solutions are frequently delivered as ready-to-use programs that are managed and maintained by the cloud service provider.

India’s Data Revolution and Cloud Computing (2016-present)

In 2016, cloud usage in India was centred on the simplicity of accessing storage, servers, and running data centres more efficiently. Cloud computing and the data revolution in India have recently played a critical role in assisting Indian enterprises and governments in accelerating their digital transformation journeys through infrastructure, platforms, and software solutions. Hyperscalers have played an important role in boosting cloud adoption by seeding superior service offerings supported by Indian service providers across system integration, data centre services, and SaaS solutions. Small and Medium Businesses (SMBs), startups, industry leaders and the government are all using the cloud to innovate and transform, each at their own speed. The transition to the cloud has been unavoidable since the COVID-19 epidemic.

Future Scope of Cloud Computing

According to International Data Corporation (IDC), the overall public cloud services market in India is estimated to reach US$ 17.8 billion by 2027, increasing at a CAGR of 23.4% between 2022 and 2027. In 2022, SaaS was the largest component of the overall public cloud services market, followed by IaaS and PaaS, with the top two cloud service providers controlling more than 40% of the Indian public cloud services market. According to a report by Oliver Wyman and NASSCOM, the Indian cloud market has surpassed the global market in terms of growth rate but India accounts for ~1.5% of the global public cloud market due to its nascent stage of cloud adoption. According to a blog by the Times of India, AI is expected to contribute around US$ 967 billion to the Indian economy by 2035. Furthermore, it is predicted to contribute between US$ 450-500 billion to India's GDP by 2025, accounting for almost 10% of the country's potential GDP of US$ 5 trillion. According to an IDC study, approximately 40% of Indian organisations will adopt cloud services in some way by 2024. According to Colliers International, India's data centre capacity is expected to increase from 770 MW in 2022 to around 1,500 MW by 2025.

Future of Cloud Technologies

• Industry clouds

The growth of industry clouds designed for certain verticals rather than a one-size-fits-all strategy is gaining traction in the post-pandemic era, particularly in retail, BFSI, and manufacturing industries. Hyperscale Cloud Service Providers (CSPs) and big Global System Integrators (GSIs) are developing vertical cloud platforms that are hosted on public clouds and are a combination of Software, Platform, and IaaS to give customised solutions.

• Domain clouds

Domain-specific clouds are designed to meet the specific needs of a domain or purpose. These solutions have numerous advantages, including increased security, compliance, and performance.

• Distributed clouds

These enable organisations to connect applications and data from disparate geographical areas. Distributed clouds improve performance by leveraging public cloud, hybrid cloud, and edge computing. While a distributed cloud is administered centrally, it has the ability to compute locally, which lowers latency and network failure, enhancing performance and compliance with regional rules.

• Sustainability clouds

Cloud services have historically provided organisations with financial, security, and agility benefits. Organisations, on the other hand, are increasingly recognising the importance of sustainability. Sustainability clouds employ data-driven solutions to monitor and enhance system performance while lowering carbon emissions, energy use and prices, water use, and waste.

• Cloud observability

Cloud observability is based on telemetry data collected from instrumentation from endpoints and services in a company's multi-cloud computing environment. According to EY and NASSCOM, around 40% of businesses have already begun to use a common tool for cloud observability.

Cloud Value Chain

The Cloud value chain is comprised of two important stakeholders: cloud end-user industries and cloud service providers. These stakeholders communicate with one another using a range of delivery models, including PaaS, SaaS, Business Process as a Service (BPaaS), Desktop as a Service (DaaS), and IaaS.

BPaaS is a sort of business process outsourcing (BPO) that is delivered using cloud services. DaaS is a cloud computing service in which a service provider distributes virtual desktops to end users over the Internet for a per-user subscription.

India's Data Centre Industry

According to India Briefing, India’s data centre market size is forecasted to achieve revenues of approximately US$ 7.44 billion in 2023, with network infrastructure emerging as the dominant segment, valued at US$ 5.09 billion. According to a report by ASSOCHAM and EY, the Indian data centre industry is expected to rise by US$ 8 billion by 2026. The demand for data collection and storage is increasing exponentially, resulting in the rise of data centres in India. India is the world's 13th largest data centre market, with 138 data centres in 2022, according to ANAROCK-Binswanger. In 2022, the data centre capacity in India was at 637 MW (India Briefing). By the end of 2025, the growth of data centres is anticipated to add 45 new data centres in 13 million square feet and 1,015 MW of capacity will be built (ANAROCK-Binswanger). According to a report by NXTRA by Airtel, India's data centre industry was estimated to be worth US$ 4.35 billion in 2021. It is further anticipated to increase by 132% to US$ 10.09 billion by 2027.

Government Policies

1. Data Centre Policy 2020

Some of the key policy thrust areas include:

• Availability of uninterrupted, clean, and cost-effective electricity for Data Centres remains one of the most essential factors for the Data Centre business.
• MeitY will collaborate with the Department of Telecommunications (DoT) to ensure reliable and cost-effective connectivity backhaul.
• Data centres will be designated as essential services under "The Essential Services Maintenance Act, 1968 (ESMA)".
• Recognise data centres as a separate class under the National Building Code.
• The creation of economic zones for data centres.
• Encourage the development of indigenous technologies, research, and capacity building.

2. TRAI’s Regulatory Framework

On November 18th, 2022, the Telecom Regulatory Authority of India (TRAI) announced its suggestions for a "Regulatory Framework for Promoting Data Economy Through Establishment of Data Centres (DCs), Content Delivery Networks (CDNs), and Interconnect Exchanges (IXPs) in India".

• The Data Centre Incentivization Scheme (DCIS) encourages the development of Data Centres (DCs) and Data Centre Parks (DC Parks).
• A portal for data centres on the National Single Window System (NSWS).
• A Data Centre Readiness Index (DCRI) framework at the national level.
• Data Centre Economic Zones (DCEZs)
• Certification standards of green DCs in India
• A recommending compilation of DC-related diploma, undergraduate, and post-graduate courses.
• A statutory body Data Digitization and Monetization Council (DDMC)
• A data-sharing and consent management framework.
• An overarching framework for ethical use of data.

3. National Informatics Centre (NIC)

The National Informatics Centre (NIC) has established state-of-the-art National Data Centres at NIC Headquarters in Delhi, Pune, Hyderabad, and Bhubaneswar, as well as 37 minor Data Centres in various State Capitals, to provide services to the government at all levels. NIC, which is part of the Ministry of Electronics and Information Technology (MeitY), is the Government of India's technology partner. It was founded in 1976 with the goal of providing technology-driven solutions to the Central and State Governments. NIC's Data Centres combine round-the-clock operations and system administration with on-site professional people. The National Data Centres serve as the backbone of India's e-Governance infrastructure, providing services to the government's many e-Governance programmes.

GI Cloud, also known as Meghraj, is an ambitious programme launched by the Government of India to utilise and harness the benefits of cloud computing. In 2014, NIC introduced the National Cloud Services as part of the MeghRaj Initiative. More than 18,000 virtual servers were provided and assigned to more than 1,100 Ministries/Departments for e-government initiatives to support the initiatives planned under the Digital India Programme and the expanding needs of ongoing projects. NIC offers computing services, container services, software as services and artificial intelligence services.

4. Other Developments

• Microsoft Data Centres

Microsoft revealed its intention to develop its latest data centre region in Hyderabad, Telangana. According to IDC, between 2016 and 2020, Microsoft data centre regions in India contributed US$ 9.5 billion in revenue to the economy. Aside from the GDP impact, the IDC analysis predicted that 1.5 million new jobs were created in the economy, including 169,000 new skilled IT jobs. The Hyderabad data centre area will be added to India's existing network of three regions, which include Pune, Mumbai, and Chennai. In December 2021, Microsoft will also introduce Azure Availability Zones in its Central India data centre region.

• India became the Council Chair of the Global Partnership on AI in November 2022. The Global Partnership on AI is an international endeavour that promotes ethical and human-centred AI development.
• In November 2022, Google and the eGovernments Foundation collaborated to supply the technology needed to establish Tele ICUs in several districts and talukas within the states of Karnataka and Nagaland, working with the corresponding state health departments in each state.
• Manipal Hospitals plans to launch virtual care services across its nationwide network of hospitals in November 2022. The company is also developing new e-pharmacy platforms that will enable patients to order medications straight from the hospital and improve the overall patient care experience using Google Cloud's technology. Manipal Hospitals will also leverage Google Cloud's conversational artificial intelligence (AI) tools to boost customer interactions and provide patients with 24-hour care.
• In September 2023, Google collaborated with Apollo Hospitals to develop a Clinical Intelligence Engine that can assist doctors in making better diagnoses using AI and ML technology to treat the most common to unusual diseases. Google Cloud Analytical Systems will assist Apollo in managing the data of over 14 million patients and analysing their health patterns to better serve them.

Road Ahead

Enterprises are progressively adopting and investing in new technologies such as cloud computing, sophisticated AI data analytics, edge, quantum, AR/VR, Internet of Things (IoT), and more. Every technology, whether it be traditional or digital, needs a cloud platform to function. To accomplish business transformation, cloud computing is enabling enterprises to scale and adapt more quickly while integrating data and services with ease. The Digital India Mission and related initiatives have created an enabling environment for cloud computing adoption.

Cloud services are being adopted by government organisations more frequently to improve service delivery, reduce expenses, and advance data-driven governance. The growth of Indian startups has also played an important role in altering the cloud computing market. Furthermore, a collaboration between global cloud service providers and local firms has resulted in cloud technology adoption and the development of a dynamic ecosystem of cloud-based services and solutions. The next generation of cloud computing is taking shape, propelled by technologies developed in India in response to customer demands.