Indian public cloud market is poised for continued growth

• Shift towards SaaS and the adoption of GenAI technologies to further enhance market’s potential, creating new opportunities for innovation and growth.
• The Indian public cloud services market is experiencing a period of explosive growth, driven by a confluence of factors including digital transformation initiatives, application modernisation, and the increasing adoption of next-generation technologies like GenAI.

According to International Data Corporation (IDC), the market revenue totalled $8.3 billion in 2023 and  is expected to reach $24.2 billion by 2028, growing at an annual growth rate of 23.8% for 2023-28.

The dynamic landscape showcases the increasing reliance of Indian enterprises on cloud-based solutions for their diverse IT needs.

“While enterprises continue to modernise IT on IaaS offerings, core business applications have a shifting trend to SaaS models on public cloud. These offerings are further enhanced by GenAI technologies to improve user experience and productivity,” Rajiv Ranjan, Associate Research Director, Cloud and Artificial Intelligence, IDC India, said.

The trend is not limited to SaaS. Platform-as-a-Service (PaaS) offerings, particularly those focused on fully managed databases and serverless technologies, are also experiencing strong growth.

This is fueled by the need to deploy pure cloud-native applications and modernize data management infrastructure. The integration of GenAI into these platforms further strengthens their value proposition, offering enterprises powerful tools to streamline operations, enhance customer experience, and foster innovation.

The market dominance of the top two vendors, who collectively hold over 40% of the market share, highlights the increasing consolidation in the Indian public cloud space. However, the emergence of niche players specialising in specific segments like CRM, ERM, Collaborative Applications, and IaaS is contributing to the market’s overall growth. The demand for AI platforms, data management software, and system infrastructure software is also rising significantly, underscoring the growing adoption of advanced technologies in the Indian market.

The shift towards public cloud solutions is further fueled by the increasing emphasis on cost optimisation. As enterprises navigate economic uncertainties, they are actively seeking to leverage as-a-service consumption models to reduce capital expenditure and optimize their IT budgets. This trend is further accelerating the adoption of public cloud services.

The rising investment in next-generation technologies like GenAI is also driving the demand for robust computing infrastructure and data management capabilities. Enterprises are seeking public cloud platforms to support the massive computational demands of AI applications and effectively manage the ever-growing data volumes. This is creating a virtuous cycle where the demand for cloud services fuels the development of more advanced technologies, further propelling market growth.