The public cloud market to reach ~ ₹ 630 billion by FY2025
As the country continues embracing the cultural and behavioural shift towards digitalization, businesses (large, medium, small, micro) also continue to be disrupted by advanced technologies and the COVID-19 pandemic has fast-tracked digital transformation of companies across all verticals. In this context, the National Association of Software and Services Companies (NASSCOM) today launched their report titled ‘SMB Cloud Adoption in India: Towards a Cloud First nation’ that showcases how SMBs are at the cusp of digital transformation with cloud adoption as the catalyst.
Key Report Findings:
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- India’s Public Cloud market stands at ₹ 170 billion in FY2020 and is growing at ~30% CAGR till FY2025 to reach ₹ 630 billion
- In a survey of 1000+ SMBs in India, 60% are already using cloud, though almost half are at early stages of adoption
- Best in class SMBs that adopted cloud have been able to drive 25-30% productivity improvement and 15-20% reduction in operational costs.
- Security, Analytics and Offline to Online are the three major opportunity segments for cloud adoption
- More than 50% of respondents cite lack of management support, talent and capital as key constraints for cloud adoption
- Progressive policies and awareness programs can accelerate cloud adoption
- SMBs can account for 28-30% of the cloud market by 2025
SMBs are the backbone of India’s economy. In FY2019, they accounted for $952 bn in revenue which translates to 34% share in GDP and employed 110 mn people, second only to agriculture. This makes India the second largest amongst the BRICS nations in terms of SMB contribution to GDP and employment.
The COVID-19 pandemic has severely impacted the SMB segment and they have struggled with liquidity crunch, lack of demand and lack of an alternative operational model.
However, according to the report findings, SMBs that have an online presence have shown greater resilience and are expected to see short-term revenue gain.
And this is a very important lesson: Technology adoption can help SMBs become more resilient and better equipped to handle disruption and also enhance their global competitiveness. And cloud computing is one of three fundamental technologies in this digital transformation journey (the other two being big data analytics and cybersecurity).
Debjani Ghosh, President, NASSCOM, said, “As India aims to become a cloud-first nation and with the government’s push for cloud adoption by MSMEs, it will be crucial for SMBs in India to think of themselves as Digital Enterprises and lead the E-revolution for India.”
As per the report, SMBs in India are in the process of becoming digitally savvy. Over 60% of surveyed SMBs have already adopted cloud, though with varying degree of maturity.
While technology-first segments (e-Commerce, IT-BPM firms) lead in cloud adoption followed by BFSI, media & entertainment, retail, automotive, healthcare and manufacturing are emerging verticals for adoption.
COVID-19 has accelerated cloud adoption for SMBs also as they seek business continuity and collaboration in a distributed environment. This is driving demand for collaboration & conferencing tools, CRM, BI, marketing and security tools as well as managed services.
Cloud adoption has helped customers see benefits across costs, productivity, reduced complexity and faster query resolution; customers have seen 20-25% increase in productive gains and 15-20% of operational cost reduction.
The recent onset of the COVID-19 pandemic has taken this disruption to the next level and is forcing companies to re-think their businesses and business models. Enabling business continuity, improved collaboration, a shift from offline to online as the primary channel of engagement with clients, cost-effectiveness, managing security with the increase in cyber-attacks especially during remote working are leading drivers of cloud adoption by SMBs.
Technology Adoption particularly cloud will play a key role in this journey. In the current pandemic scenario, cloud will enable business continuity for SMBs, help expand customer segments across geographies and verticals, lead to cost optimization and help them innovate/customize their products/services as per customer needs.