India’s Cloud Conundrum: Behind the Digital Curtain

The silver lining in this cloud—no pun intended—is the escalating investment from both global and Indian companies in building extensive cloud infrastructure and data centers. This ramp-up is in response to what is perceived as an exploding demand for cloud services in the subcontinent.

According to Statista Market Insights, the global average spend on public cloud services per employee in 2024 is projected to be $196.80. In stark contrast, India’s average expenditure per employee on public cloud services is expected to be a mere $17.53—just about one-eleventh of the global average. Nations competing with India on the global business stage have significantly higher expenditures: Brazil at $68.26, Malaysia at $107.50, and Mexico at $123.70. India’s figure is only marginally higher than Vietnam’s $14.32 [Statista, 2024].

Further compounding this issue is the disparity in cloud revenue distribution. India’s revenues from cloud services are projected to hit $99 billion in 2024, accounting for 14% of the global total. The lion’s share of this expenditure will be in the United States, contributing $330 billion, nearly half of the global cloud revenues, with China trailing at 10%. Comparatively, the shares of Brazil, Vietnam, Mexico, and Malaysia are significantly smaller [Statista, 2024].

Analyzing the data from another angle reveals even more glaring disparities. Data from the cloud infrastructure business in India and their internal investor presentations indicate that the per capita expenditure on cloud services in India is a scant $5 annually, compared to a global average of $68. In the U.S., this figure skyrockets to $809, while in China it stands at $41. The Indian cloud market in 2023 was estimated at $5 billion [Internal Investor Presentations, 2023].

However, there’s a beacon of hope amidst these dismal statistics. Indian and global companies are vigorously expanding public cloud infrastructure. Real estate consultancy JLL forecasts an additional 693 megawatts of data center capacity to be added between the second half of 2023 and the second half of 2026. This expansion will require an additional 8.8 million square feet of space, with 77% of this new capacity being concentrated in Chennai and Mumbai. This ambitious expansion is projected to necessitate an additional investment of $4.4 billion solely for real estate and the creation of data center infrastructure [JLL, 2023].

Clearly, substantial investments are being announced, but is it enough? The slow pace of cloud adoption in India raises questions about the underlying factors. Is it a lack of awareness, insufficient digital literacy, or perhaps infrastructural bottlenecks?