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Why cross-border data flows matter most to startups in India

10th Dec 2018
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Indian startups have greatly benefited from the cross-border flow of data. Myntra, Flipkart, redBus, even Fortis Healthcare have gone global to access huge computing power.


The last few years saw a rapid surge in the number of startups that embraced India’s economy, which enabled us to become one of the fastest growing startup ecosystems in the world. At the same time, however, it is also true that most startups end up folding within two years of their existence just because their business models don’t work or they lack the funds to further their ideas.

Cloud computing fundamental to startups

To save costs, startups not only need to bring innovative models of operation but also look at alternatives that satisfy the basics. A vital component of this is data storage, the cost of which has reduced drastically since the advent of cloud infrastructure. Cloud computing refers to storage hosted on the internet, instead of a local server. This means that startups don't need to have IT infrastructure on premise to automate and streamline business processes.

Scalability is a crucial requirement for the growth of startups and cloud allows them to enhance their operations without spending too much time on fixed resources. Startups can choose from customisation and availability of choices with respect to services, such as Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). Subsequently, they also have other options like Microsoft’s Azure, Amazon’s AWS, Google’s GCP, etc.

As the cloud infrastructure matures, it is expected that startups and enterprises will significantly expand their digital platform strategy as an essential element to adopt cloud-based services. So it’s not just cost saving, but the cloud is also helping startups innovate. And since they are getting increasingly tech-savvy and as the Internet spreads its wings through smartphones, cloud services would receive a further fillip.

Data localisation’s effect on cloud adoption

There is, however, the elephant in the room and it’s called data localisation. This proposed policy measure could directly impact the growth of start-up, cutting short availability of cheaper services as it threatens to strike at the root of what startups are built on - affordable infrastructure. If implemented, it will mandate data storage in India that will skyrocket the price of the room, forcing Indian startups to shift away from affordable cloud infrastructure. For example, in Brazil, the cost of cloud services shot up five times once data localisation measures were implemented.

Cloud infrastructure relies heavily on the cross-border flow of data

The nature of the cloud is such that it cannot be run at optimum levels without the free flow of data across borders. Innovation powered by cloud computing offers enormous potential benefits and these innovations often require the movement of data across international borders. Through cloud computing, startups have been able to drive innovation and transform almost every aspect of their operations, as the ability to move data freely underpins many of the most innovative products and services. Access to such technology has been made happen by sharing data across borders, which also allows startups to compete against larger businesses and reach customers around the globe in ways that were not possible before.

Data localisation, on the other hand, may end up increasing costs, reducing economic opportunities, closing Indian markets for foreign startups thereby killing competition, restricting access of international market to Indian startups and also impacting customers by limiting access to new products and services. There are two aspects - one, that data localisation may end up costing more to access high-end cloud platforms. Second, it may also force companies to migrate to local cloud storage (and therefore no cross-border data flow), that may bring down the quality of services and hurt innovation.

 Cross-border data flows critical to data analytics

Startups need to apply analytics to the customer, product, transactional, account, service, and social data. Organisations use data to create better insights, which, in turn, lead to innovation.

Data localisation measures will make it harder and costlier for startups to gain exposure, and to benefit from ideas, research, technologies, and best practices that accompany data flows.

In India, startups have greatly benefited from the cross-border flow of data. For example, Myntra and redBus have hosted their data servers with global providers such as Amazon Web Services that allowed them to innovate and deliver enhanced analytics. Fortis Healthcare, in a bid to save costs, relocated their data centre abroad (Azure) while Flipkart (recently acquired by Walmart) too, during its early days, relied on Canadian servers for operations. Local businesses prefer going global as that helps in accessing huge computing power to analyse data, and thereby develop new products and subsequently allow startups to focus on their core business model that enhances longevity.

In healthcare, cloud technology has helped doctors store and access data from anywhere in the world that helped them provide real-time solutions to their patients.

Digital health knowledge resources, electronic medical records, mobile healthcare, hospital information system, and hospital management information systems are some of the technologies gaining wide acceptance and rely heavily on a free flow of data.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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