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Cloud solutions will drive IT solutions for the foreseeable future

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An increasing number of businesses-scale digital transformations and cloud delivery solutions will continue to drive growth for IT and technology services. On public cloud (hyperscaler) services, TCS and Infosys are leading the global leader-board among the major Indian service providers but there is scope for more.

According to Gartner research, in 2022, global cloud revenue is estimated to total $474 billion, up from $408 billion in 2021. Over the next few years, estimates show that cloud revenue will surpass non-cloud revenue for relevant enterprise IT markets. As of ISG’s 3Q21 Index call, Infrastructure as a service or cloud ACV grew 36% YTD – its fastest growth rate since 2018.

Even as Accenture is the leading provider in the IT solutions market with over 70% of its revenue coming through digital cloud and security solutions, Indian outsourcing leaders are not far behind.

“There’s probably not much digital transformation without cloud out there. While businesses had a certain time frame for digital transformations pre-pandemic…they got much more serious about using these solutions to build resiliency since the pandemic,” said Narsimha Rao Mannepalli, Executive Vice President, Head – Cloud Infrastructure and Security Solutions, Infosys during a recent interaction.

In the second quarter of FY22, Infosys’ digital revenue (a large part of which is revenue from cloud and digital services) was $2.2 billion, a growth rate of 43% year on year while cloud deals generated over 70% of Wipro’s new revenue.

“On public cloud (hyperscaler) services, TCS and Infosys are clear winners on market share among the major Indian service providers. Infosys has been among early movers on hyperscaler-specific focus with strong vertical and engineering assets and accelerators,” said Prashant Shukla, vice president of advisory firm Everest Group.

To address the increased demand for cloud adoption, Indian IT companies are setting up dedicated business units by partnering with cloud hyperscalers, like AWS, Microsoft Azure and Google Cloud while building talent pools and marketing initiatives for specific cloud competencies. For instance, HCL Technologies recently announced that it has over 10,000 AWS professionals already and plans to boost this capacity to 20,000 for its AWS business unit.

“We are training our employees to offer growth and transformation solutions. While I would not say that it has crossed 50% in terms of revenue yet, but in terms of opportunities pipeline we are close to that share,” said Krithi Krithivasan, president and global head, BFSI, TCS talking about how this these solutions are increasingly relevant to TCS’ largest business vertical.

According to HfS Research chief executive Phil Fersht, most companies in this space have grown their presence through discrete packages of products for tailor-made needs to discover, assess, migrate, automate, and manage solutions.

Of course, each of the companies has also been developing internal strategies in this space. Infosys has also been creating talent in this space and its offering is now comparable with Accenture flagship cloud solutions, added Fersht. The company has rolled out programs to train employees on the customer side to boost adoption as well.

TCS has focused on growth and transformation solutions for new and existing clients in addition to legacy IT engagements with over 70% employees trained in digital offerings. Wipro has targeted transformation focused deals while training over 35% of its employee base on cloud solutions. HCL has built out a toolbox of automation assets packaged in the firm’s DRYiCE suite of products to boost client ROI while global peer Cognizant focused on tools and IP focused on hybrid, multi-cloud, containeriz ..

“Enterprises are looking for a clear methodology from their partners on doing all this as one service for both core and contextual applications. Infosys’ Cobalt and Accenture’s MyNav are good examples of how this can be achieved. Regarding the cloud services leaders, our research shows Infosys leading the way for the Indian heritage providers, followed by Cognizant, HCL, Wipro and TCS,” said Fersht.

The Indian IT firms are also changing their operating models to enhance focus on emerging markets like India where enterprises as well as SMBs are investing in public cloud solutions, especially migrating existing solutions to cloud. However, in this particular market, Indian IT service companies also compete with core providers like HPE, IBM and its managed services spin-off Kyndryl among others.By 2025, Gartner estimates that over 95% of new digital workloads will be deployed on cloud-native up from 30% in 2021.

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