Cloud to rain dividends on India’s IT industry

On a recent trip to India, Microsoft CEO Satya Nadella explained how cloud was making a significant difference, transforming every segment of India’s business and society.  “One of the fundamental changes that cloud has brought about is around productivity, collaboration tools, which are now available to all the SMEs as well. You can truly use what the largest of enterprises in the world are using, anywhere in the world,” said Nadella at a conference.

The Microsoft CEO also spoke about Microsoft’s cloud services and how it is being used across the public and private sector in India. Nadella gave the example of startups and SMEs in India which are relying on the company’s Azure Cloud. He shared that he had met an entrepreneur who was reshaping healthcare by using data to reshape diagnostic capabilities. The fact that diabetes can be monitored in a more effective manner can reshape healthcare.

Cloud computing is expected to rain dividends on India’s IT industry.

A recent study by VMware-commissioned Kantar IMRB has revealed that with IT/ Data security being a key challenge organizations face in the mobile cloud era, most organizations surveyed in India are keen to adopt cloud computing to enhance business agility and efficiency – hence information security and cloud services will have maximum impact on businesses in the next 3-5 years.

As high as 86% percent of organizations see their IT budget increasing over the next 3 years and 80% of businesses are willing to invest time, money and skill on cloud services, as per the findings of the study, which is focused on identifying key CIO priorities in India by 2020. 

The Indian government is also proposing subsidies of up to Rs 1 lakh for micro and small enterprises to encourage them to use cloud computing for information and communications technology applications. In cloud computing, MSMEs use Internet to access common as well as tailor-made IT infrastructure, including software, for managing business. The subsidy will be provided on user charges for 2 years.

The proposals are part of the modified guidelines of the scheme for 'Promotion of Information and Communication Technology in MSME Sector'. It centres around cloud computing which is emerging as a cost-effective and viable alternative compared to in-house IT infrastructure.

"The benefits that accrued through implementing information and communications technology (ICT) for subsidy period in their enterprises will motivate MSMEs to continue to use the ICT application with their own expenses after this period," the MSME ministry said in the draft guidelines. The subsidy disbursed will be through the direct benefit transfer route. The MSMEs initially will make a full payment to the service provider. The office of the development commissioner MSME will disburse funds to Telecommunications Consultants India Ltd (TCIL), which in turn will transfer it to the account of MSMEs.

"It has been observed that MSMEs are generally not availing of the benefits of ICT application and cloud computing for promotion of their business. Therefore, it is proposed that MSMEs be sensitised regarding the benefits of ICT, including cloud computing application for business promotion, at a cost of Rs 5 crore," the MSME ministry said.

Cloud computing services will be provided in two categories. Under the first, maximum subsidy of Rs 1 lakh per unit will be disbursed over 2 years to micro and small enterprises.

In the second, services through cloud at much lower cost will be offered to the desirous micro, small and medium enterprises.

The subsidy will be on cost of usage services, which will be shared by the central government and the micro and small enterprise units availing of it.

The total budget outlay in the scheme for this activity is Rs 69 crore with the Centre's contribution of Rs 41.40 crore for 2 years.

The MSMEs will have to apply to the service provider and place their request on the official website or the national portal for taking the benefit of subsidy.

Companies such as Reliance, Essar, L & T are also using cloud computing in a big way. A number of ecommerce companies and startups have also moved to the cloud. There has also been an increase in adoption in BFSI and healthcare companies.

With an increase in cloud adoption, global data players have zeroed in on the Indian market. Amazon's cloud service arm, Amazon Web Services--Microsoft's biggest competitor in the space--has built its data centres in around five locations in Mumbai. Chinese e-commerce company Alibaba is working hard to increase its cloud footprint in India. Cloud computing is one of Alibaba’s most important verticals as it plans to expand its revenues beyond e-commerce.

Cloud allows companies to experiment with new businesses in a more agile way without spending too much money or time. It also enables them to acquire fully-functional business capabilities (SaaS) or complete platform capabilities (IaaS or PaaS) where handcrafted solutions can be built.