Amazon Internet Services eyes govt contracts in cloud services

Amazon Internet Services is targeting the public cloud services market in India, which is projected to grow 30.4% in 2016 to total $1.26 billion, according to research firm Gartner


Amazon Web Services has more than 75,000 customers in India, which according to company also includes about 89% of the top 100 start-ups in the country.
 
Photo: Reuters
Amazon Web Services has more than 75,000 customers in India, which according to company also includes about 89% of the top 100 start-ups in the country. Photo: Reuters

New Delhi: Cloud services provider Amazon Internet Services Pvt. Ltd is looking at securing government contracts as well as initiate further price cuts going forward as spending on cloud gains pace in India.

“Till we didn’t put a region in the country, we haven’t really seen too many government departments wanting to put data on us… but now that we have it, we are seeing a huge amount of activity this year,” said Bikram Bedi, managing director of Amazon Internet Services, part of Amazon.com Inc.’s Amazon Web Services (AWS) unit.

The public cloud services market in India is projected to grow 30.4% in 2016 to total $1.26 billion, according to research firm Gartner Inc.

AWS has more than 75,000 customers in India, which according to company also includes about 89% of the top 100 start-ups in the country.

The business traction is the result of AWS’s strategy to launch India data centres in June 2016 to specifically cater to fast-growing Indian cloud computing sector, which is expected to be one of its biggest markets in the coming years.

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“With current e-governance initiatives driving on a public-private partnership (PPP) model, immense investments are being made on the IT infrastructure front. Government bodies are primarily leveraging community cloud for cost and effective manageability reasons,” said D.D. Mishra, research director, Gartner.

Indian businesses and government prefer to put their data on local servers and as a result rival Microsoft Corp also launched local data centre in India in September, offering its Azure cloud services and commercial Office 365 services to attract local government and businesses.

AWS also experienced some of its customers shifting their data to India-based data centers after their launch in June.

“Yes, a lot of customers are choosing to move to India,” Bedi said adding that for some customer serving the Indian market, it made sense to move to India as it brings down the latency time compared to using its Singapore servers.

The company, which has already issued 52 price cuts in last 10 years and still continues to be a cash cow for the parent Amazon.com, said that it will stick to its strategy of a passing price benefits to its customers thus keeping the cloud market on razor thin margins.

AWS became a $10 billion business this year and grew at a blistering pace of 58% in the second quarter of 2016 compared to year earlier.

“It has to be a high volume low margin business and we love it,” Bedi said that adding that with constant growth in economy of scale, AWS is able to generate the required cost benefits to keep lowering prices.

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