Home > Industry > Infotech > IT spending on cloud infra grows to accommodate new challenges

Companies are spending more of their IT budgets on cloud infrastructure, thanks to the coronavirus pandemic. A new study by the Boston Consulting Group (BCG) indicates that companies in the Asia-Pacific (APAC) region are dedicating about 5% of their IT budgets to their cloud expenditures. The change is obviously due to the increase in remote working needs and other challenges arising out of the stay-at-home orders due to covid-19.

The growth in IT spending in the APAC region is faster than that in the US and Western Europe, according to Rajiv Gupta, managing and senior partner at BCG. “Across the APAC region, spending on the public cloud and related services is growing at a compounded annual growth rate (CAGR) of 25%, much faster than in the US and Western Europe," he said.

The BCG study was conducted in collaboration with Amazon Web Services and covers companies in India, Indonesia, Australia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. According to the study, the growth in the public cloud may have an economic impact of over $450 billion across the region by 2023.

“The pandemic made cloud a bare necessity, we see an overt mention of remote working but that is just one of the many use cases for cloud," said Monesh Dange, partner & national leader – advisory markets, EY India.

“Video communication products, secure collaboration frameworks, virtual desktop enablement and Cyber security solutions would all converge to provide a sustainable workplace structure which could be anywhere," he added.

“One of the main benefits of cloud computing is access to innovation and agility," said Luc Grimond, a managing director at BCG. Grimond, adding that companies are “shifting workers to virtual environments" and using more end-user computing like collaboration tools.

“Cloud investments will have longer term benefits as well, such as risk reduction, the ability to provide new and better services to business stakeholders, and improved personalization of product and service offerings," Grimond added.

According to an April 2020 report by the International Data Corporation (IDC), spending on IT cloud infrastructure in the fourth quarter, 2019, grew by 14.5% year-on-year (YoY) to $13.3 billion worldwide. Private cloud also grew by 8.2% to $6.1 billion during the period.

Cloud spending is expected to make up as much as 10% of IT spending budgets by 2023, the BCG study said. An Australian airline involved in the study said it was able to save $40 million in annual fuel costs by using cloud-based analytics. The airline simulated 'tens of thousands of flight patterns' to create more efficient routes. “We were able to spin up approximately 4,000 CPUs, run the analysis, and then spin use back down to nothing," the company’s chief information officer (CIO) said.

That said, the need for robust cloud infrastructure has led to higher demand for personnel with IT skills such as engineering and coding, which has been a challenge in countries like India, Vietnam and the Philippines. The BCG study quoted an executive from a top Indian bank who said finding the right talent is a challenge in the country. In the study, 55% of the respondents said they are focusing on reskilling their staff.

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