Indian IT firms open up to cloud, seek to ramp up spending next year

Cloud spend is seen as the key growth driver in 2020 as large traditional enterprises like Pentagon give out multi-billion dollar contracts

3 min read Last Updated : Nov 22 2019 | 9:13 PM IST

Indian IT services companies are building up dedicated divisions for providing cloud-related services to clients as larger enterprises are slowly preparing to move part of their operations to cloud. Analysts are of the opinion that many big enterprises, which are reluctant to move to cloud owing to security concerns, have started to adopt hybrid cloud (combination of public and private cloud).

Even global research firm Gartner has predicted that total spend on IT services is likely to grow by 5.5 per cent to touch $1.08 trillion in 2020, which will be mostly driven by companies' cloud-related spending. It also predicted that outsourcing deal sizes in the cloud space is likely to be larger next year.

"While new-age digital firms and small & medium enterprises have migrated to cloud, many large firms including government bodies have not done so owing to security concerns. However, this is slowly changing," said Pareekh Jain, founder of Pareekh Consulting and IT outsourcing advisor. "Pentagon's $10 billion cloud contract to Microsoft, and IBM's buy of Red Hat indicate the demand uptick in the cloud space."

In October this year, the US Department of Defence (known as the Pentagon, which is the name of its headquarters) has outsourced a $10-billion cloud contract to Microsoft for providing enterprise-level, commercial Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) to support its various operations. Given the demand uptick, IBM has acquired Red Hat, a leading hybrid cloud provider, for $34 billion this year to cash in the emerging demand in this area.

"For years, the industry has speculated that there would be a huge wave of cloud migration business, which did not materialise as firms kept their legacy estates where they were. However, this is now changing as firms come to realise that they can't continue with their digital transformations with legacy infrastructure," said Peter Bendor-Samuel, founder and chief executive officer (CEO) of global IT outsourcing consultancy firm Everest Group.

Last month, HCL Technologies has set up a dedicated business unit for Google cloud with over 1,300 professionals. The company plans to expand the team count for this division to around 5,000 professionals in the next few months. "Not only HCLT, but many vendors also have a dedicated cloud services practice. Most large system integrators have cloud-specific units. For example, Accenture has a cloud business unit for Google too, as do TCS, Infosys, Atos, and many more," said Hansa Iyengar, senior analyst at London-based Ovum Research.