NASSCOM & Deloitte Report on Deconstructing the “Cloud”

Global cloud computing market projected to grow at 33% CAGR and reach ~USD 680 billion by 2020; Cloud computing to create new opportunities, reshape existing ones and modify the landscape for IT Services; enhance domestic market adoption; Opportunity for India to create leadership in a still nascent area, create a level playing field for product companies from IndiaNASSCOM, in association with Deloitte, also launched a study titled, ‘Deconstructing the “Cloud”: The New Growth Frontier for Indian IT-BPO Sector’. The focus of the study is to understand the opportunities for the IT-BPO sector in India and key imperatives for India to build leadership in the cloud.

According to the study, Cloud computing is expected to have a significant impact on current IT-BPO services industry, in terms of types of services offered, delivery mechanisms and business models. The global cloud computing market is projected to grow at 33% CAGR and reach ~USD 680 bn by 2020 while the domestic market opportunity expected to reach ~USD 16 bn in the same period. About 2/3rd of this will be ‘new-business’ and the rest will come from existing service lines.

Launching the report, Mr. Som Mittal, President, NASSCOM, said, “Cloud computing is reshaping the Indian IT market by generating new opportunities for IT providers and driving changes in traditional IT offerings. There are ample opportunities for cloud in every industry, and with the increased preference of cloud adoption in the coming years, industry will have to invest in competency building internally to take advantage of cloud computing technologies. While security is one of major hindrances toward cloud adoption, policies needs to be created and designed to help enterprises establish and execute a comprehensive security strategy that addresses threats and potential liabilities resulting from cloud computing. India will definitely have a leadership position in the cloud market in times to come.”

Cloud is also opening up new avenues for new “Product” oriented services. It will help create new service opportunities around cloud lifecycle management, legacy modernization and cloud management due to new complexities. Cloud is reducing barriers to entry and enabling non-traditional IT players to enter the space. It is imperative for IT services players to re-invent their mental models and substantially re-tool themselves.

While cloud will create and utilize some of the existing service lines/spaces for IT-BPO companies, it also opens up a whole new opportunity to play along the cloud services stack. SaaS, the largest segment contributing USD 244 bn by 2020, will see an explosion of players delivering solutions to suit specific industry, geography and/or business process needs. LaaS, with proven value proposition is expected to be the second largest cloud market to reach around USD 143 bn by 2020. PaaS has been largely restricted to create SaaS applications; however could potentially transition to standalone development and deployment platforms. IT-BPO vendors being limited by scale to compete in generic PaaS segments, will look to align to specialist PaaS category focusing on specific client business needs.

In the cloud world, speed is of essence and it is critical to “fail quickly” and re-invent rather than have long innovation cycles. Players especially in the SaaS space will have to think like mobile application developers of today – speed to build network effects. Solutions have to be modularized and “designed to fail” so that failure of a component does not bring down the entire application. Players will also have to think in terms of value chains and ecosystems in the cloud stack to figure out where they would like to play and who do they partner with. This will be especially important because of the new breed of players (e.g. telcos, market pivots etc) who will enter the services space and also to expand customer base beyond the traditional enterprise clients.