Feature Story

Cloud Set to Burst in India

by Laurence Cruz

With its low barriers to entry and ability to handle large numbers of customers, cloud computing is enticing many of the country's 50 million startups and small businesses.

Indian online ticketing giant BookMyShow.com grew out of a simple idea hatched by three vacationing friends: What if you could buy movie tickets online? But simple can be incredibly powerful—especially in a country with 100 million people accessing the mobile Internet via smartphone. Spurred by Indians’ love affair with movies and growing tech-savviness, BookMyShow.com has since grown to add tickets for concerts, plays, expos, and more recently Formula 1 racing and India’s other national passion, cricket. In 2008, the company broke the 1,000-tickets-in-a-day barrier. In July 2011, it sold 100,000 tickets in a single day, and a year later sold more than 2 million tickets in a single month.

“The kind of demand they see everyday is huge,” says Shradha Sharma, founder of Bangalore-based YourStory.com, which promotes India’s entrepreneurial ecosystem. “And the reason they’ve been able to do all this is because they are on cloud.”

Cloud computing in India is set to skyrocket. Tech research company IDC put the cloud market in India at $688 million in 2012 and expects it to hit $3.5 billion by 2016—a five-fold increase. Shradha says all the big corporations in the country already run at least part of their business in the cloud. And she says a growing number of smaller companies are joining the trend, led by success stories like BookMyShow.com, its bus ticketing counterpart redBus and many others.

Cloud Appeal

The appeal of the cloud for startups and small businesses is clear. Cloud computing lets them outsource computer programs and functions like data processing and storage away from local devices to a network of remote servers (“the cloud”). These resources can then be accessed from anywhere on-demand via connected devices such as smartphones, tablets and PCs—great for companies that want to get up and running fast, need to scale quickly and/or don’t have a big IT budget.

Shradha says the cloud holds particular allure for Indian entrepreneurs, many of whom share a frugal mindset that favors things like pay-as-you-go, comparative shopping and learning from other companies’ case studies. It’s a mindset that has led many small and midsized businesses to prefer pirated or copied software over paying full price.

“But cloud allows software vendors to sell useful, legitimate, high-end tools on a SaaS (software-as-a-service) pay-as-you-go model, or a mixed freemium model,” Shradha says, referring to the popular tiered pricing strategy that includes free and premium services.

The cloud also puts otherwise-pricey big data and analytic capabilities within reach of startups. The combination of social media and mobile cloud allows startups to set up an online presence, market themselves, sell services and/or content, and mine analytics to help with development of future customers and/or products. All of which, Shradha says, has helped propel startup acceleration in the cloud era past the startup growth rate of the pre-cloud dotcom-boom era of the late 1990s. Today, India is home to more than 10,000 technology-based startups, with up to 8,000 new ones sprouting every year—an effective growth rate of 25 percent to 30 percent, according to YourStory.com.

Barriers to Cloud Adoption

But the cloud boom is just getting started. Of the roughly 50 million startups and small and mid-sized businesses in India, Shradha says the vast majority—43 million—are traditional small businesses that are not even online.

“That’s a huge market,” she says. “There’s a huge opportunity for them to go online and start interacting online.”

Some of the factors keeping these companies offline are technical—access, reliability and security, for example. Only 1.1 per every 100 inhabitants has access to fixed broadband in India, which ranks 122 in the world for fixed broadband penetration, according to a 2013 report by the Broadband Commission. Compare that with 41.9 per 100 people for top-ranked Switzerland.

As fixed broadband connectivity increases, cloud adoption is expected to follow. But Indians aren’t waiting around. Many of the country’s 900 million mobile subscribers use mobile phones to access cloud resources. And venture capitalists have taken note.

“In the mobile app space is one of the biggest areas they’re looking at, both from an innovation perspective and in terms of reaching the mass Indian user base,” Shradha says.

There are also non-technical barriers to cloud adoption. According to Intuit India survey results shared recently on Bloomberg TV, Indians resist cloud adoption due to perceptions around cost and affordability, a lack of skilled labor available to small businesses and concerns about return on investment (ROI). That said, a recent IDC survey of 473 respondents, 200 of which were small organizations, showed a huge willingness to adopt cloud technology.

“At least in the startup space, people are very eager and hungry to adopt,” Shradha says.

One Size Doesn’t Fit All

Many B2B and B2C startups have taken the leap into the cloud with great results, especially in certain sectors. They include companies like HealthcareMagic, Neurosynaptic and Drishti Eye Centre in the healthcare space; FrontalRain Technologies and Cropin Technology in the agri-tech space; Indix, Aurus Network and Flipkart in the big data analytics, education and e-commerce spaces, respectively; and many more in the tech, media, ERP and finance spaces.

“All these spaces are seeing a lot of innovation,” Shradha says.

She adds that, when it comes to shopping for a cloud provider, Indian entrepreneurs are extremely value-conscious and keenly aware that one size doesn’t fit all. Some are very focused on the support that’s available. Others—especially in data-heavy analytics companies—are focused on security. Still others want open source offerings from their cloud provider. And they’re willing to shop around to get what they want.

“If they see a greater value, they don’t mind shifting to another platform,” Shradha says. “And that’s what’s very exciting about startups—they’re ready to explore.”

And in India, with its 1.2 billion inhabitants, the cloud offers so much to explore.

“The change is happening very fast,” Shradha says.

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