Cloud Computing: The Potential Next Generation Export of IT Services

Cloud computing is fast changing the paradigm of computing and of compute consumption. Rightfully, India is enthusiastically adopting Cloud Computing to solve its compute infrastructure issues. Cloud computing is considered as a disruptive IT delivery model that allows software/hardware services to be delivered remotely through the Internet. The public cloud computing market in India is expected to grow tremendously in the coming years.

However, India and Indian policymakers are viewing Cloud Computing primarily as a mechanism to solve the compute infrastructure issues. Cloud Computing services could also become a significant IT services export from India.

As India is uniquely positioned to become a low cost, high quality provider of Cloud Computing in all its forms, including IAAS, PAAS, SAAS and its myriad other iterations. The primary constituents for setting up a Cloud Computing infrastructure are readily available in India, such as (a) hardware infrastructure, (b) infrastructure software, (c) cloud enabled application software, (d) connectivity, (e) skilled manpower (f) electricity and (g) cooling.

Given the focus on local manufacturing in hardware, India is soon going to become the hub of IT manufacturing, thus leading to reduced cost of setting up of hardware infrastructure. Also, setting up of cloud infrastructure would also increase the market demand for the associated computing equipment, thus making it lucrative to increase IT manufacturing in the country, thus forming a virtuous cycle of increasing market and reducing prices.

India is already a global powerhouse in software, both infrastructure software and application software. Hence, India would have the competitive advantage of providing Cloud Computing because of its software prowess. Exporters of Cloud computing service, would also provide a platform to application developers to tap international markets which otherwise involves significant cost of sales through alternate sales channels. So again, a virtuous cycle will be formed with Cloud computing service exports attracting application developers to access larger global markets which in turn would reduce the cost of providing applications from India.

Thanks to the aggressive rolling out of broadband and connectivity under the programs of the Government, India would in the near future be one of the most well-connected economies in the world. This would enable India to be highly competitive in providing Cloud Computing.

Coming to the issue of electricity, it would be prudent to locate such cloud computing infrastructure close to cheap, inflation-proof sources of electricity. The areas close to Hydel power would be ideal for such infrastructure.

Given that India has large number of such locations in the Himalayan states such as Himachal Pradesh, Uttarakhand, J&K, Sikkim and the rest of North East, it would be a obvious to locate Cloud Computing parks in such locations.

These Himalayan locations also provide natural cooling, thanks to the perennial snow cover, thus further reducing the cost of operations for Cloud computing infrastructure.

Thus, to propel India into becoming an exporter of Cloud Computing services, it is imperative that appropriate policies are adopted to notify and create Cloud Computing Parks in the Himalayan States, with sufficient bandwidth. In addition, focus should be put on trans-border legislations that inhibit the export of Cloud Computing Services.

But what if after making considerable investments in setting up Cloud Computing parks, the exports don’t take off because of say trans-border legislations ? The investment into rolling out the internet bandwidth and the associated infrastructure for the cloud computing parks will not get used as they would immediately get re-purposed for delivering education, health and other social services to the local communities.

What is important to note, Cloud computing is a natural monopoly as it benefits from economies of scale. Thus, the first movers of Cloud computing and gain scale and thus reduce cost of delivering Cloud computing, making it difficult for late entrants to compete. Hence, if Government of India hesitates in setting up such Cloud Computing Parks, other nations will get into this space, with India missing this bus.