India's IaaS market to grow 40 percent until 2015

India is still in the very early stages of cloud adoption, driven primarily by infrastructure-as-a-service (IaaS) deployments.

A study by Knowledgefaber, a consultancy and research firm, on cloud computing adoption among India's enterprises indicates IaaS as the cloud delivery model that will witness higher adoption rates among these companies. The IaaS market in the country is set to grow at 40 percent CAGR (compound annual growth rate) between 2011 and 2015.

Currently, about 40 percent of total IT spending in India comes from large enterprises and substantial investment is expected from this segment in cloud computing as well. With legacy infrastructure in place and existing investments in enterprise software licenses, the migration path in terms of cloud delivery and deployment models for large enterprises will be different from small and midsize businesses (SMBs).

"Enterprises belonging to manufacturing, BFSI (banking, financial services and insurance), healthcare, information and communication technology (ICT), government and education sectors are expected to be major cloud adopters driven by higher IT spending and increasing need for cloud-based services," the study said.

SMBs, however, are leveraging cloud-based applications such as CRM (customer relationship management), ERP (enterprise resource planning) and SCM (supply chain management) and other collaboration and communication applications to boost organizational efficiency and productivity, and effectively compete with larger enterprises.

But while India forms 17 percent of the total cloud market in Asia-Pacific, domestic firms are still in the phase of understanding cloud benefits as they look to cut IT costs and achieve higher IT services availability.

"Current IT architecture has led organizations worldwide to allocate nearly 70 percent of their IT budgets to keep existing applications running, leaving scope for only 30 percent to create new value. With increased business complexity and declining profit margins, companies are now looking at cloud computing as a new IT business model to create more value, achieve cost benefits and business agility," Knowledgefaber added.

The total cloud computing market in India was estimated to be worth US$458 million in 2011. By comparison, the global cloud computing market was worth US$34.7 billion in the same period of time.

Asia leads cloud growth
Cloud computing is now witnessing robust adoption across the world, especially amongst developing markets in Asia-Pacific and Latin America. India, China, Australia and Singapore are the those leading the way for the Asia-Pacific region.

Robust uptake of mobile devices such as smartphones and tablets, need for online storage and improving Internet and broadband availability will provide the impetus for cloud adoption in the region, according to the report.

Conversely, security concerns, government regulations and lack of clarity on business benefits from cloud remain major hurdles for adoption in the region.