Powering Indian Start-ups for Digital Acceleration

India’s burgeoning start-up landscape has evolved over the past five years to become 3rd largest in the world, more than 78,000 Department for the Promotion of Industry and Internal Trade (DPIIT) Recognized start-ups from all 36 states and union territories (UTs) in 644 districts, spanning 56 industries. In 2021, as India began to emerge from consecutive pandemic-induced lockdowns, it witnessed the recognition of more than 20,000 startups in 2021.

The pandemic has acted as a catalyst and has accelerated the adoption of cloud services in India. The ‘cloud’ refers to the servers that are accessed over the Internet and the software and databases that run on those servers. As digital transformation increases, attention has focused on cloud adoption in the do-anything-anywhere world.

Cloud is the way forward, with predictions that more than 95% of new digital workloads will be deployed on cloud-native platforms by 2025, up from 30% in 2021. According to a report by the Boston Consulting Group (BCG ), India is one of the largest and fastest growing public cloud markets in the Asia-Pacific (APAC) regionprojected to record triple growth from $2.6 billion to $8 billion between 2018 and 2023.

Key Market Drivers

  • India’s startup ecosystem is booming due to monetary and non-monetary support from the government’s India Startup Initiative and the availability of qualified IT staff. Startups here act as consumers of cloud services (Ola Cabs, Bigbasket) and providers of cloud services (such as Practo and Freshdesk). Therefore, the increasing number of startups is driving the provision and adoption of cloud services.
  • Digitization in India enables Artificial Intelligence (AI) and Virtual Reality (VR) business operations. Cloud computing is the main force that allows companies to store, manage and analyze the enormous amount of data required for AI applications.
  • The smart device and wearable device industry is booming. Cloud computing is the primary mechanism for communicating and storing information on such devices.

policy initiatives

  • Government initiatives such as MeghRaj and Cloud vision for India 2022 have established India as a global hub for cloud computing and are providing momentum to enhance the adoption of e-government initiatives using the cloud.
  • The 2018 National Digital Communications Policy envisages establishing India as a global hub for cloud computing, content hosting and delivery, and data communication systems and services by establishing regulatory frameworks, data centers , delivery networks and Internet exchanges.
  • Cloud services have improved governance in India as national initiatives and schemes like Swachh Bharat Mission, Government e-Marketplace (GeM), e-Hospital, My-Gov and e-Transport are now based on Cloud.
  • The government launched DigiLocker, a cloud-based platform for issuing, sharing and verifying critical documents or certificates for life. As of March 2022, DigiLocker had over 101.1 million users and had issued 4.94 billion documents

Clearly, the move to the cloud is driven by its incredible business benefits, from resiliency, speed, and mobility to scalability. Together, they culminate in unlocking innovation, operational efficiency, real-time analytics, and cost savings across all verticals, setting companies up for successful digital adoption.

So what explains this ubiquity of the cloud in the industry?

The ‘Trillion Dollar Paradox’: Putting the Long-Term Cost of the Cloud in Perspective

Even as businesses embrace the cloud, there is growing speculation of late about its long-term cost implications.

An article published by Andreessen Horowitz (an American venture capital firm) drew attention to the impact of the cloud lifecycle on a company’s finances, referring to it as the “trillion dollar paradox”. While the cloud remains profitable soon after adoption, its cost far outweighs the return on investment (RoI) it generates as a business evolves, scales, and grows slower.

The revelation prompts businesses across the board, from start-ups to established companies, to rethink their cloud strategies and spending.

The cloud enables startups to shift gears and adapt to changing market dynamics by revamping processes, culture, and customer experiences; is at the heart of successful digital acceleration. Leveraging the cloud the right way is all-important to unlocking the best of both worlds: value from the cloud while keeping costs down.

Specifically for startups, since the focus is on building the business rather than spending energy on IT infrastructure, the public cloud seems like a perfect solution. However, several alternatives are more profitable and allow startups to channel their funds to grow their business. Studies have shown that workloads running 24/7 in a public cloud for about eight months cost as much as owning the infrastructure with 36 months of support, including the cost of operation.

Therefore, startups need to define a hybrid or multi-cloud strategic roadmap and consider the right placement of workloads based on access requirements, security and control, period of operation, skills , complexity, business objectives and other factors.

For example, dynamic and geographically dispersed workloads benefit most from the cloud’s autoscaling capabilities. Conversely, consistent workloads, such as test and development, that run 24/7 may not be ideal candidates for the public cloud.

Additionally, the costs associated with early-stage data policies and retaining IT professionals with relevant skills could drive cloud costs even higher.

It is worth acknowledging that India today has an opportunity to emerge as the next big cloud player supported by the strong adoption of cloud technologies in its business ecosystem. To take your next big leap, you’ll need to review your spending strategies, from macro government spending on cloud infrastructure to business investment in cloud services. An innovation sandbox for local players to unlock the full potential of cloud with unit economics of cost and return on investment will surely help India rewrite history as the largest cloud market.

This has been written by StartupIndia, Raunaq Jaisinghani and Dell India.

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