Cloud as a catalyst forbusiness transformation
2022 trends

2

Cloud as a catalyst for business transformation: 2022 trends

Table ofContents
Cloud as a Transformation Imperative

8

Public, Private or Hybrid?

16

Service Model Options

20

The Risk Landscape24

TCO and ROI Perspectives

28

Call to Action

32

Cloud as a catalyst for business transformation: 2022 trends

3Foreword
4

Cloud as a catalyst for business transformation: 2022 trends

C

OVID-19 has transformed businesses in
unforeseen ways. Crucial changes came in theway businesses operate and manage systems,
processes and people. One of the major avenues of
disruption during these times has been the cloud.
Although cloud adoption has accelerated over the
past several years, it has truly emerged as a catalyst
in driving business transformation amidst growing
uncertainty. Cloud now plays an integral role in helping
businesses bridge geographical boundaries, sustain
momentum amidst lockdown scenarios and addressinconsistencies in IT infrastructures. This year’s EYNASSCOM cloud survey shows how cloud can powerbusiness transformation.
Cloud features in every aspect of business strategy
now — from operations enablement to cost optimization.
Organizations that continue to invest in the cloud
know how it can effectively equip businesses to adapt
to evolving market scenarios. It is no longer in the
periphery of discussions around customer strategy
but has taken the centre stage. Owing to its inherent
benefits such as adaptability, broader access tocapability and cost flexibility, the cloud has proliferated
into newer aspects of technology operations, including
platforms and infrastructure - which will continue to see
an uptick in the coming times.

One of the core benefits of cloud adoption is the flexibility it offers in terms of cost. This
allows organizations to explore multiple strategic options. The different cloud models andservices enable organizations to implement cloud in different ways, allowing them to invest
in technology effectively. The EY-NASSCOM survey sheds light on the drivers that propel
the seamless migration of business-critical applications to the cloud. Consequently, moremature cloud applications and models will evolve for modernization, which in turn will
help enhance business strategy in terms of customer experience, employee engagement,
cost optimization and business model redesign. We hope you find our report insightful,engaging and thought-provoking.

Debjani Ghosh

Sangeeta Gupta

Nitin Bhatt

Nitin Sawant

President

Senior Vice President

Technology Sector Leader

NASSCOM

NASSCOM

EY India

Cloud and EnterpriseArchitecture Leader
EY India

Cloud as a catalyst for business transformation: 2022 trends

5Executive

Summary

EY’s 2022 cloud study, conducted in collaboration with NASSCOM, seeks to understandthe evolving role of cloud in Indian enterprises. It deconstructs the key factors driving
cloud adoption and analyzes key trends across segments and sectors of the Indian industry.

Primary drivers
for moving tocloud

Top four sectors
where adoption
has increased

Growth &Transformation

IT/ITeS -Security andData Privacy

Cloud as a transformation imperativeofenterprises
expect toincrease
their cloud
spends overthe next two
years

53%

Cloud adoption

63% of large

Reasons forcloud adoption:

39% medium

Remote working

38%

Change inorganizational
processes

enterprises

enterprises &small
enterprises haveincreased cloud
adoption over thelast one yearofenterprises
haveincreased
their cloud
adoption overthe last one
year

6

enterprises use
hybrid cloud

78%
BFSI - 53%
Healthcare - 53%
Pharma - 49%

Workplace
Productivity

80%

34%

Cloud as a catalyst for business transformation: 2022 trends

Change inproduct/services
deliveryConnecting withcustomers
Competitive
edge

28%

enterprises use
public cloud68%

of smallenterprises use
public cloud

Evolving cloud models
SaaS adoption by
Indian organizations
continues to behighest at

79%

followed by

52% and
PaaS at 45%

IaaS at

SaaS usage driven by:84%

of large
enterprises and87%

of IT/ITeS
companies

Gaps
acknowledged inmanaging security
risks:

92%of smallenterprises

80%of medium
enterprises

53%

and
of
large enterprises

The risk landscape
Shortage of digitalskills is a challenge:

73%

augment
cloud skills throughnew talent acquisition

66%

invest in
automation

Cloud as a catalyst for business transformation: 2022 trends

7

1
Cloud as aTransformation
Imperative
8

Cloud as a catalyst for business transformation: 2022 trends

COVID-19 has transformed ways to conduct business
forever. The cloud emerged as a key driver of businessgrowth as it helped accelerate the deployment of newage technologies to improve business performance.
Organizations have changed the way they have been
thinking about cloud. What drives them to adopt cloud is
not just cost savings or business continuity, but businessgrowth and transformation, security and workplace
productivity. The survey reveals that these drivers
remained consistent across industries and organization
size. Organizations, therefore, have started viewing cloud
as an essential ingredient of their business strategy.

Our survey reveals that cloud adoption is driven by
63% of the large sized organizations, 39% of themedium sized organizations and 38% of small sizedorganizations surveyed.
Figure 3: Increase in cloud adoption by size oforganization

63%

Figure 1: Top 3 business drivers for moving to cloudBusiness Growth andTransformation

1
3

2

Security andData Privacy

Workplace
Productivity

The above drivers have accelerated cloud adoption
across industries. The survey highlights that 53% oforganizations increased their cloud adoption in the last
one year alone.

Large

39%

38%

MediumSmall

Today, India is moving beyond the initial exploratory
stages of cloud adoption. Organizations across industries
are adopting cloud at a large scale and are developing
unique use cases for business and operational benefits.
As the technology matures, cloud providers are adding
capabilities customised to the needs of customer segments.
From a highly scalable cloud offering to the pay-as-you-go
model, cloud service providers are aligning with industry
requirements. So, they are designing and providing solutions
that are unique and apt for various industries, triggeringa growing interest in sector and vertical-specific cloudservices and applications.

Figure 2: Impact of pandemic on cloud adoption

3%

44%
53%

No impact on our cloud adoption
Our cloud adoption has increased
Our cloud adoption has decreased

Cloud as a catalyst for business transformation: 2022 trends

9

In the beginning, industry cloud models focused on the
IT/ITeS sector. However, during COVID, sectors suchas banking and financial services (BFSI) and healthcare
stepped up their efforts towards IT modernization anddemonstrated zeal in adopting cloud computing. Our
survey reveals that 78% of IT/ITeS companies haveadopted cloud. BFSI and healthcare were the othernotable sectors with sizeable cloud adoption, with 53% of
respondents from both sectors reporting that they haveadopted cloud.

Figure 4: Top cloud adopters by sector

78%

IT/ITeS

Digital used to be part of the strategy, but
now it is the strategy. Organizations of all
sizes are adopting cloud not just for businessresilience due to the pandemic, but toturbocharge innovation and growth. We arehelping customers across industries digitallytransform and gain competitive advantage
by driving operational efficiency, enhancing
customer experience by utilizing big data
analytics and making better decisions faster.

Bikram Bedi, Managing Director,
Google Cloud - India

10

Cloud as a catalyst for business transformation: 2022 trends

53%

53%

Healthcare

BFSI

Respondents report increased cloud adoption tomodernize their existing legacy systems and leverageadvanced technologies for growth in top line and bottom
line. Irrespective of the business scale and organization’s
size (small, medium or large), enterprises prioritizedemployee safety while conducting business-as-usual amid
the pandemic. They discovered ground-breaking use
cases of cloud technology in facilitating remote working,enhancing employee productivity, optimizing criticalprocesses and reducing IT costs. When asked to identify
the most important use of cloud in the last 12 months,
75% of organizations picked leveraging the cloud forfacilitating remote working for their employees.

Figure 5: Top reasons for increased cloud adoption

75%

71%

69%
51%

RemoteworkingChange inorganizational
processes

Change inproduct/services

Change in ways
to connect withcustomers

46%

Maintaincompetitiveedge

Across all segments of the industry, the need to changeorganizational processes, as well as products and services
are seen as other key reasons for cloud adoption.
Cloud is likely to replace on-prem in the next few years
as the top platform of choice for business operations
across the Indian industry. COVID-19 has helped manyorganizations cross the adoption barrier for cloud andrealize its benefits over on-prem. Cloud has been thevehicle for rapid innovation, developing new products,
building new customer experiences, and increasingcollaboration across the supply chain and partner
ecosystem. During the pandemic, larger organizations
were the most impacted as they could not reachcustomers via physical channels. To protect the customer
base, they had to invest rapidly in new digital channels
and improve customer understanding through better
analytics and improved operational efficiencies. Clearly,
this trend is going to drive additional investments incloud technologies.

Cloud will be foundational to scaling India’s
digital journey. Cloud, data and AI are
empowering every company to be a digitalcompany, providing the speed and scale toinnovate from anywhere. Microsoft’s endto-end solution areas across infrastructure,
data, AI, security, productivity tools andbusiness applications are empowering everyorganization in India from governments,
start-ups, SMBs and large enterprises
to innovate, grow and differentiate theirbusiness with the cloud.

Anant Maheshwari, President,
Microsoft India

Cloud as a catalyst for business transformation: 2022 trends

11Digital payments, harnessing healthcare benefits online,
and collaboration tools resulted in IT/ITeS, BFSI and
healthcare sectors becoming the top adopters of cloud.
As more digital data accumulates due to this adoption,
the hyperscalers will need to make their analytics services
more efficient and cost effective. Clarity on costs arounddata ingress and egress would help unlock the dark datain on-prem data centers. Additional direction from thegovernment around data privacy, data residency andcompliance in sectors such as banking and insurance will
accelerate the migration of data to cloud and enable theadvanced use cases of artificial intelligence and AR/VR.
Cloud adoption in India until now has been significantly
limited to large enterprises. However, our survey reveals
that small (38%) and medium (39%) businesses haveadopted cloud as they embrace digital business models toinnovate and drive sustainable growth.

Cloud is not just an enabler for cost
optimization and digitization of core
operations, it is a catalyst for driving business
transformation. Its value lies in driving
growth through innovation and adoption of
emerging technologies. Financial services
companies whose business strategies havecloud at the core are disrupting legacy
business models and rapidly gaining
competitive advantage.

Mohit Joshi, President, Infosys

12

Cloud as a catalyst for business transformation: 2022 trends

Figure 6: Cloud adoption across sectors

78%
45%

49%

Industrials Pharma

53%

53%

BFSI

Healthcare

IT/ITeSRespondents also shared the various reasons for having increased cloud adoption over the last 12 months. These areshown in figures 7, 8 and 9.
Figure 7: Top reasons for increased cloud adoption - IT/ITeS

83%

76%

76%
55%

Change inorganizational
processes

RemoteworkingChange inproducts/services

Maintaincompetitive
edge

48%

Change in ways toconnect withcustomers

Figure 8: Top reasons for increased cloud adoption - Healthcare

75%
69%

69%

56%
38%

Change inorganizational
processes

RemoteworkingChange inChange in ways to
products/services
connect withcustomers

Maintaincompetitiveedge

During COVID-19, healthcare in India has seen a huge shift in service delivery models. Healthcare companies havereported multiple use-cases on the cloud, driven by changes in how they interact with patients, which has further
triggered changes in organizational processes.

Cloud as a catalyst for business transformation: 2022 trends

13Figure 9: Top five reasons for driving cloud adoption - BFSI

66%

Remoteworking

66%

Changeproduct/services

55%

52%

Change inorganizational
processes

Maintaincompetitive
edge

48%

Change in ways toconnect withcustomers

Given that remote working has become a key driver for cloud adoption, cities such as Chandigarh, Indore, Vadodara,
Kochi, Coimbatore and Thiruvananthapuram have emerged as the new IT hubs during the pandemic. This is a great
opportunity for the government and hyperscalers to invest in digital infrastructure and the new cloud regions in tier 2/3
cities. This will provide employment to engineering graduates in these cities and offer companies easy availability of
local talent at a much lower cost. Cloud is also leading to a new hybrid organizational structure, which is a combinationof remote and physical workplace staff. This will help organizations have a much larger workforce and provide
employment to 2-3X times the headcount than what a physical space permits. More SaaS-based solutions need to be
developed for better monitoring of employee productivity, which enhances competitive advantage without comprisingon workplace flexibility.

14

Cloud as a catalyst for business transformation: 2022 trendsCloud as a catalyst for business transformation: 2022 trends

15

2
Public, Private orHybrid?

16

Cloud as a catalyst for business transformation: 2022 trends

The COVID-19 pandemic has introduced organizations
to the benefits of deploying a scalable, distributed andflexible infrastructure. The momentum has further
directed enterprises towards three major types of cloudmodels, Public, Private and Hybrid. Our study suggeststhat Indian organizations are comfortable in considering a
hybrid or a multi-cloud approach to leverage an optimum
combination of different deployment models that best fit
business requirements.

Larger organizations are embracing public cloud for use
cases such as cloud native development, application
modernization, data backup, DR/BCP environments andintegration gateways.
Figure 11: Adoption of public cloud in India

68%

Figure 10: Cloud adoption landscape in India

34%

53%
18%

34%
28%

PublicCloud

Large
enterprises

PrivateCloud

Mediumenterprises

Smallenterprises

HybridCloud

Although the adoption of public cloud continues to belower than private and hybrid models, the potential which
the public cloud model presents is immense, especiallywhile comparing the lower upfront and total ownershipcosts. In the public cloud category, Indian organizations
equally prefer single and hybrid cloud deployments.
A private cloud can be accessed by only one businessand is physically located within the organization at adata center or hosted by an outside service provider.
Unlike the public cloud, all services and infrastructure
are hosted on a private network, with hardware andsoftware specifically tailored for that organization. Many
government agencies and financial institutions opt for a
private cloud service due to regulations, compliance andsecurity/privacy concerns.
The benefits include more control over data andinformation, since it is not shared with other server
tenants and it can also be customized to meet specificbusiness needs. However, the trend is changing. Smalland medium enterprises, start-ups continue to leverage
public cloud to enable faster time-to-market and access tomore automation and DevOps based tooling.

The true power of the public cloud
was underscored in last two years asorganizations underwent cloud-led digitaltransformation and achieved impact at scale.
Cloud today is enabling business continuity
for organizations of all sizes, driving financial
inclusion through innovative e-payments
and e-KYC, supporting students to continue
education amidst the disruption and enabling
telemedicine at speed to support people
affected by the pandemic. As we move
forward, three areas – building the futuretechnology workforce, implementing securetechnology practices, and strengthening
compliance – will be key enablers for cloudto accelerate growth in India’s businessecosystem and empower the government toachieve digital inclusion. At AWS, we are fullycommitted to support our customers andpartners in all these areas and are excited forthe positive change we can enable together.

Rahul Sharma, President, Public
Sector - AISPL, AWS India andSouth Asia

Cloud as a catalyst for business transformation: 2022 trends

17

Most large companies choose not to be invested solely
in the public cloud due to the time and money they havealready spent to develop their on-prem platforms. Instead,they consider hybrid cloud as it gives them the best ofboth the worlds: the flexibility of the public cloud andthe security of the private cloud. Hybrid cloud provides
the ability to manage increased computing demands byseamlessly moving from on-prem systems to the public
cloud. This enables multiple benefits, for instance, thehandling of overflow, without sharing the entire data,
as well as the power to protect sensitive data and lowlatency workloads by keeping it off the public cloud andwithin the organization’s infrastructure. This also keeps
costs in check as companies scale to the public cloud only
when needed.
COVID-19 revealed that the public cloud model helps
organizations scale and adopt to changes faster thanother cloud models. For example, our interviews revealthat the public cloud model opens an organization to abroader spectrum of service and scale potential comparedto the private or hybrid models.
The pandemic imposed a great amount of pressure upon
the healthcare sector, needing it to adapt to greater
demand levels and scale up fast. The survey reveals that
unlike any other industry, the healthcare industry reports
a greater incidence of public cloud usage.

The journey to the cloud should not be rushed. A fully
cloud native approach is not necessarily the rightsolution. A “cloud–first” path is often desirable, as itsupports business agility, optimized migration and cost
reduction, all driven by decision-making that is informedby an organization’s risk appetite. To capitalize on thebenefits of cloud transformation, enterprises should
revisit other IT initiatives and align them to an overall
cloud-first, enterprise IT strategy. Hybrid cloud is the
stepping-stone to complete public cloud adoption.
The roadmap should begin with a comprehensive viewof the infrastructure and software assets within thebusiness which will help shape the larger strategy andcost-benefit economics.
This view should include cost of maintenance,
replacement and expected useful life, as well as
qualitative aspects of the assets, such as the level ofcustomization and anticipated complexity to migrate.
Hyperscalers should also provide more options to becompliant with the latest regulatory requirements.
Further, they should help manage systemic risks ofcloud failures and reduce business anxiety with moretransparency around their resiliency and business
continuity measures.

Figure 12: Cloud models adopted by sectors

Healthcare

47%

Pharmaceuticals

41%

43%

Manufacturing

28%

BFSI

25%

49%

IT/ITeS

23%

58%

Public cloud

18

43%

23%
27%

62%

Private cloud

30%
36%
40%

Hybrid cloud

Cloud as a catalyst for business transformation: 2022 trends

Thriving in the face of uncertainty andcompeting in the digital economy needsa robust cloud strategy. Organizations
undergoing digital transformation routinely
grapple with harnessing their data to create
positive business outcomes. A hybrid cloudstrategy should therefore be a key imperativefor decision makers looking to increase
speed-to-market and improve customer
experience without compromising ecosystemsecurity.

Puneet Gupta, Vice President &Managing Director, NetApp India

Cloud as a catalyst for business transformation: 2022 trends

193Service Model
Options

20

Cloud as a catalyst for business transformation: 2022 trends

Among the available cloud service options, SaaS
continues to be the most preferred cloud deployment
option among Indian organizations. SaaS models are
becoming the go-to option for organizations given
the flexibility and affordability offered through theirsubscription-based offerings and centrally locatedremote cloud networks. During the pandemic, SaaS
solutions became the fastest-growing segment in the
Indian industry.
Figure 13: Cloud models used by Indian organizations

Our survey shows that PaaS and IaaS have been primarily
driven by large enterprises. 62% of the large sizedorganizations have adopted PaaS. However, only 22% of
medium - sized and 10% of the small - sized organizations
have adopted PaaS. Higher total cost of ownership of IaaS
and PaaS models compared to SaaS is likely a key factor
behind the low adoption of these models among mediumsized and small organizations. However, considering thesemodels offer more agility and reduced upfront costs, thepotential for these to proliferate across all segments of
the Indian industry is significant.
Figure 15: PaaS adoption by size of organizations

79%

62%
52%

45%

22%
10%
Software asa Service(SaaS)

Infrastructure
as a Service(IaaS)

Platform as
a Service(PaaS)

Our survey reveals that SaaS adoption has been driven byorganizations of all sizes: 84% of respondents from largeorganizations and 72% respondents from medium andsmall sized organizations have adopted SaaS.
Figure 14: SaaS adoption by size of organizations

Large

MediumSmall

Approximately 69% of large organizations have adopted
IaaS. However, only 32% of medium-sized and 10% of thesmall organizations have adopted IaaS.
Figure 16: IaaS adoption by size of organizations

69%

84%
72%

32%

72%

10%

Large

Large

MediumSmall

MediumSmall

Three industries stand out when it comes to adoption ofalternative cloud models such IaaS and PaaS: IT/ITeS,
industrial manufacturing and BFSI.

Cloud as a catalyst for business transformation: 2022 trends

21

Figure 17: Current cloud deployment models

38%

47%

35%
64%

60%

41%

73%

70%

81%

85%

Healthcare

Industrials

Pharma

IT/ITeS

58%

37%

67%
BFSI

SaaS

While SaaS continues to be the largest cloudsegment for cloud consumption due to its
ability to provide on-demand, out-of-the-box
solutions for rapid transformation, PaaS is
expected to grow at a faster rate. The hugemigration of employees during the pandemic
to remote work leverages PaaS-based
cloud native solutions. The maturity of theautomation and productivity tools will further
accelerate the adoption of PaaS services likeserver-less cloud computing and automatedcloud orchestration in the next few years.

Nitin Sawant, Leader - Cloud andEnterprise Architecture, EY India

The early adoption of cloud was a lift-and-shift strategy
of applications to cloud driven by cost saving as the main
objective. However, as organizations matured, they
started building new applications using cloud native PaaS
technologies. These were the born in cloud enterprises.
However, organizations that did not want to build inhouse cloud skills and were looking at off-the-shelfproducts with the cloud advantage, went for the SaaS
cloud service model.
The pandemic accelerated the adoption of SaaS based
products and solutions since it was important to reachcustomers through alternative channels quickly. The
SaaS model was not only offered in the form of enterprise

22

55%

51%

Cloud as a catalyst for business transformation: 2022 trends

IaaS

PaaS

business applications such as CRM (Customer RelationshipManagement) and ERP (Enterprise Resource Planning),
but also in the form of sectorial solutions, for example,
core banking platforms. The SaaS model also enabled
small and medium enterprises to achieve scale byharnessing the agility of the cloud.
In order to advance the adoption of this model, SaaS
solution companies need to provide more visibility totheir customers around data residency, security controls,
data portability and ease of customization to increase
adoption. The dearth of cloud talent is hindering the
adoption of PaaS applications. Hyperscalers need toincrease their focus on certification programs andpenetrate additional engineering colleges to “catchthem early” and build a community. Online learning andcertification programs sponsored by the government,
industry associations and private edtech platforms willneed to play a key role in the coming years to fill thistalent gap.

The pandemic has largely transformed
the way the financial services industry
functions and has accelerated its adoptionof new technologies. Cloud-enabled digitaltechnologies have empowered the FSIs
to be agile, be innovative and become
more resilient. We see cloud serving as afoundational platform, continuing to drive
the digital transformation agenda.

Anant Gupta, FSI Leader,
Google Cloud - India

Cloud as a catalyst for business transformation: 2022 trends

23

4
The Risk
Landscape24

Cloud as a catalyst for business transformation: 2022 trends

The recent upsurge in demand for cloud notwithstanding,many executives are concerned about the risks related
to cloud migration. However, with the rising efficacy
of cloud-led services, cloud service providers haveinvested heavily in enhancing the security and controls
environment to provide better risk assurance. The
challenge however, remains for user organizations withlimited understanding of cloud operations and underinvested in cloud-skills, particularly in the areas of security
and compliance. It is critical for user organizations to“catch-up” with the pace at which cloud service providers
are enhancing their security capabilities.

Figure 19: Companies reporting gaps in managing cloudsecurity

73%

66%
46%
26%

New talentacquisition

With the rapid uplift in cloud adoption, therisk landscape has undergone a tectonic shift.
Organizations wanting to accelerate theircloud journeys are often concerned about
security. We believe that security imperatives
on the cloud are no different from thoserequired on-prem and must operate atscale flawlessly and with dynamism. This
necessitates taking a holistic approach,
one that provides constant visibility acrossendpoints, networks and even multiple
cloud environments. Adopting a Zero Trust
approach and bringing in more automation
backed by AI and ML are crucial tomaintaining cloud security.

Anil Valluri, Managing Director
and Vice President, Palo Alto
Networks India

Our survey highlights that Indian enterprises are
rethinking existing risk frameworks and control matrices
to cater cloud-led operations. They are also adopting
observability to ensure that they have deeper insights into
complex usage of cloud services via common dashboards.
Most CIOs and CISOs continue to curate metrics
and scorecards to track their risk performance andsecurity posture.

Automation

Outsourcing

Reskilling

Our survey reveals that the majority of Indianorganizations do not have mechanisms to track andmanage their cloud security risks. Small and mediumenterprises seem to be the most concerned in thisregard. Infact, many respondents told us that they do
not even have a formal process for identifying missioncritical risks, nor do they have a dedicated function to
manage security, privacy and compliance risks associatedwith cloud.
Figure 20: How organizations manage cloud security
metrics

Security metrics
not completely deﬁned
Security
metrics
actively
managebusiness
risks

20%
45%

8%

27%

Security
metrics arenotconsistently
trackedSecurity
metrics
consistently tracked

However, the challenge for many organizations is
ensuring the adequacy and completeness of the datafor computation of metrics and review of its relevanceon a consistent basis. The above challenges further
intensify as organizations opt for multi or hybrid cloud
deployment models.
Cloud as a catalyst for business transformation: 2022 trends

25Given the ever increasing risk of cyber attacks, several executives
told us that they are bolstering their security defences with a threepronged strategy involving people, process, and technology. They
want to augment their traditional network security measures with aproactive approach and continuously monitor everything happening on
their systems.
Indeed, planning and preparing for a breach must be top of mind forexecutives today. Utilizing cloud-hosted services can help in managing
breaches, based on a zero-trust approach. Cloud-supplied security
offerings provide a cost-effective solution with lower cost of entry
reducing the upfront cost of equipment. In addition, setting up andconfiguring new services in the cloud can happen “at pace” compared
to on-prem systems.
Given the advantages of cloud security services, we will likely see amuch greater adoption of cloud in the coming years.
In addition to security-related risks, shortage of talent presents amajor challenge before the industry. Our survey reveals that whileorganizations are making every effort to hire digital skills from themarket, there is also a major push to leverage automation to bridge theskills gap.
Figure 21: Organizational response to digital talent shortages

73%

66%
46%
26%

New talentacquisition

26

Automation

Outsourcing

Cloud as a catalyst for business transformation: 2022 trends

Reskilling

Cloud as a catalyst for business transformation: 2022 trends

27

5
TCO and ROI
Perspectives

28

Cloud as a catalyst for business transformation: 2022 trends

Organizations took the first step of moving to the cloudas the business cases suggested a reduction in IT costs
and optimization of redundant resources. However, asorganizations advanced the adoption, the economics
of using cloud did not seem to be as lucrative as in
the beginning of the journey. Our study reveals thatmeasuring return on cloud investments is a prime concern
among the organizations who are actively ramping up
cloud migration. One in every four enterprises has a cloudstrategy with an allocated budget in place. The cloud
spend is typically 5-15% of total IT budget. Four in every
five enterprises are bullish about their cloud budget next
year. Initiatives focused on internal IT and infrastructuresuch as lifting and shifting infrastructure to cloud has
been the most challenging for Indian enterprises inmeeting total cost of ownership (TCO) objectives. Further,sometimes the lack of clarity around costs of cloud setup,
data migration and network connectivity from on-prem
data centre to cloud zones have made the movement tocloud a slow process.
Figure 22: FY22 IT budget for cloud

75%

16%
7%
<5%

2%
5-15%

16-25%

Responses to our survey suggest that CIOs or CTOs arelong accustomed to managing the cost attributed toon-prem IT. In such cases, costs can be broken down
into logical buckets (run, scale or back-up) and traced to
specific components. The cloud also makes it easy to add
new services, such as disaster recovery, which were notcost effective for on-prem applications.

As cloud computing models evolve andproliferate, there will be an increased focus
on cloud cost management to maximize
returns. Research firm IDC predicts that by2023, the belief that enterprises are wastingat least 20% of their public cloud spending
will drive enterprises to invest in public cloud
cost management, with the goal of cutting
cloud waste in half. We expect that in 2022,
Indian enterprises will prioritize leveraging
cloud cost optimization solutions such as
usage dashboards and billing visibility tools
to monitor cloud spending. Besides, they will
focus on using advanced tools to interpretcloud billings, forecast usage patterns, andaccurately predict long-term expenditure.

Abhinav Johri, Director, Digital &Emerging Technologies, EY India

26-35%

Organizations are increasing their budget allocations forcloud related initiatives. As shown in the above figure
75% of our survey respondents increased their cloudbudgets by 5-15% in FY22. Several reasons are attributed
to the challenges with regards to keeping cost structure
within predictable limits, which in turn inhibits cost
optimization. They include factors such as the use of morethan one cloud service provider, mix of public, private
and on-prem infrastructure, democratization of cloudwithin the business, existence of shadow IT and weakline of sight into workload deployment and the usage ofunderlying components.

Cloud services require a governance structure wherebycompanies not only set a budget and track spending
against it, but also establish alerts when true costs exceed
predicted costs. Our survey shows that enterprise clientsare considering multiple strategies to enhance their grip
on cloud economics. This includes defining a migration
strategy prior to deciding the mix of lift-and-shift andcloud-native application development. Resource tagging
is also essential to help establish business unit ownership.
This helps in the identification and application of charge
backs. It is critical for stakeholders to be notified withusage alerts, leading to early warnings in case set-limits
are breached.

Cloud as a catalyst for business transformation: 2022 trends

29

Finally, enabling architecture teams with skills in cloud
cost management is essential as they make resourcemix and deployment decisions. Many organizations havefollowed a lift-and-shift approach to migrating legacy
applications and workloads to the cloud, assuming it is thequickest path to realizing the return on investments (ROI).
This may not necessarily be the case, however the sweet
spot for cost optimization lies with a mix of lift-and-shift
and cloud-native application development. There needs
to be a constant endeavour to monitor costs for resource
utilization, to setup thresholds and alerts, and further,
to create cloud cost optimization teams and adopt cloud
observability tools.
Cloud spending is expected to further increase in theyears to come. As the demand for disruptive technologies
such as artificial intelligence, advanced analytics and theInternet of Things increases, it would propel the growthof cloud technology as well. Based on the survey analysis,
one may surmise that Indian organizations will likely
increase their cloud investments manifold in the next
two years.
Figure 23: FY23 cloud budget predictions

53%

1%-5%
increase

21%

6%-10%
increase

6%
2%
18%

30

>10%
increase
Decrease
expectedYet to be
finalized

Cloud as a catalyst for business transformation: 2022 trendsCloud as a catalyst for business transformation: 2022 trends

31

6Call to Action

32

Cloud as a catalyst for business transformation: 2022 trends

Enterprises are adapting to a new consumer-centric marketplace in which customers expect their products and services
to be delivered more conveniently and quickly than ever before. More and more organizations utilize the cloud to gain
access to on-demand resources — servers, applications and networks. The right cloud strategy offers significant benefits
in areas such as customer experience, employee engagement, development of new products/services, cost optimization,and the development of entirely new business models.
By addressing key challenges that may impede cloud adoption, we can strengthen the competitive posture of enterprises
across India. Specifically, we recommend a focus on the following systemic actions to be taken up by the entire cloud
fraternity of hyperscalers, solution providers, regulators and CXOs across India.

Figure 24: Call to Action

Costs

Security

TalentInvestments

PolicyHyperscalers andcloud providers
should facilitate
understandingof cloud
operations andcosts with userorganisations
and promote
democratisationof utilities for
migration,
landing zone
setup and costmanagement.

Greater focus
on security risk
management.
Organisations
should assessoverall maturity of
security elements
and develop acomprehensive
response
complementing
hyperscalers’
efforts to be
secure-by-design.

In order tocompliment
their automation
initiatives,
enterprises mustenhance skillingof current talentand shift-left byinvesting earlyin talent supply
chain to build adigitally fluent
talent pipeline.

Public sector
and hyperscalers
should invest
in digital
infrastructure andnew cloud regions
in Tier-II and III
cities to accelerate
hybrid operating
models.

Focussed efforts
in partnershipwith hyperscalers
to curate policies
which can easeadoption of cloud
by addressing key
concerns related
to compliance,
privacy and data
residency.

Ensuring that organizations adopt the right approach to cloud requires a detailed understanding of business imperatives
as well as available solutions. Enterprises with cloud-enabled businesses and IT transformation mindsets will thrive andbe less prone to disruptions due to competitive threats or black-swan events like COVID-19.
We are optimistic that the Indian industry will seize the cloud opportunity and leverage its benefits to gain competitive
advantage and provide better experiences for customers, employees and other key stakeholders. In doing so, we areconfident that many will create disruptive business models that will help create long term value and ultimately, a betterworld for all.

Cloud as a catalyst for business transformation: 2022 trends

33About thesurveyThis report is based on responses from over 500 CEOs, CIOs and CTOs who participated in our survey which was
conducted in last quarter of 2021. The survey covered large (60%), mid-sized (30%) and small (10%) companies in India.
We also conducted in-depth interviews with a cross-section of survey respondents and technology leaders. In addition
we received inputs from cloud solution and service providers. The survey covered over 15 industry sectors, including IT/
ITeS (18%), BFSI (11%), Industrials/Manufacturing (9%), Pharma (7%), Healthcare (6%) and Professional Services (6%).
The findings from this study can be leveraged by boards, corporate executives and government leaders interested infurther accelerating cloud adoption across organizations in India.

Contributors
NASSCOM TeamEY TeamAchyuta Ghosh

Nitin Sawant

Head - Insights
Achyuta@nasscom.in

Leader, Cloud & Enterprise Architecture
EY India
Nitin.Sawant@in.ey.com

Diksha Nerurkar
Deputy Director - Research
Diksha@nasscom.in

Abhinav Johri
Director, Cloud & Enterprise Architecture
EY India
Abhinav.Johri@in.ey.com

Vikrant Jamwal
Director, Technology Sector
EY India
Vikrant.Jamwal@in.ey.com

34

Cloud as a catalyst for business transformation: 2022 trendsOur

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Cloud as a catalyst for business transformation: 2022 trends

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