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End-user expenditure on public cloud services will increase globally by 21.7 percent to reach $597.3 billion in 2023, up from $491 billion in 2022, according to a recent projection from Gartner. The next stage of digital business is being driven by cloud computing as businesses seek disruption with new tools like Web3, generative AI, and the metaverse.
“Hyperscale cloud providers are driving the cloud agenda,” stated Sid Nag, Vice President and Analyst, Gartner. “Organizations today view the cloud as a highly strategic platform for digital transformation, which is requiring cloud providers to offer more sophisticated capabilities as the competition for digital services heats up.”
Nag said, “For instance, large language models (LLMs) facilitate generative AI, which needs powerful and highly scalable computational capabilities to handle input in real time. “Cloud provides the ideal platform and solution. It is no accident that cloud hyper scalers are the main competitors in the generative AI race.
In 2023, the cloud market is anticipated to rise across all segments. Platform-as-a-service (PaaS), at 24.1 percent, is predicted to expand end-user spending the most in 2023, followed by infrastructure-as-a-service (IaaS), at 30.9 percent.
Worldwide Public Cloud Services End-User Spending Forecast (Millions of $)
According to Gartner, by 2026, 75 percent of businesses will embrace a digital transformation strategy that uses the cloud as its primary underlying platform.
According to Nag, the user experience, digital and business outcomes, and the virtual-first world will be the driving forces behind the next phase of IaaS growth. “Cloud infrastructure and platform services are necessary to meet the rising demands for compute and storage power from emerging technologies like chatbots and digital twins, which enable businesses to interact with their customers more directly and in real-time.”
Even though cloud infrastructure and platform services are driving the strongest spending increase, SaaS continues to be the largest cloud market sector by end-user expenditure. Spending on SaaS is anticipated to increase 17.9 percent, reaching $197 billion in 2023.
The end-user spending on public cloud services in India is anticipated to increase by 26.3 percent to $10.1 billion in 2023. IaaS is anticipated to experience the fastest growth in end-user expenditure in 2023, followed by the PaaS market.
India Public Cloud Services End-User Spending Forecast (Millions of $)
IaaS is still at the foundation of new technologies like cloud-native platforms, generative AI, and digital touchpoints and continues to be a scalable, essential platform. IaaS spending locally is expected to climb 33.1 percent in 2023 as a result of organizations in India that have historically lagged in adopting those technologies.
According to Nag, PaaS spending in India would continue to rise and increase by 30.5 percent in 2023. IT modernization initiatives within Indian firms, which have historically lagged and will remain a focus for local businesses this year, are what is driving spending on PaaS. In addition, emerging cloud-native technologies like serverless, functions, microservices, containers, and embedded AI are being used to update several cloud-based applications and workloads.
“The hyper scalers are firmly in control of the cloud computing technology substrate, but there is more fragmentation in the leadership of the business application layer,” added Nag. “Providers are under pressure to reinvent SaaS solutions for higher productivity, utilizing cloud-native capabilities, embedded AI, and composability – particularly as budgets are more and more controlled and owned by business technologists. The cloud platform and application markets will experience a wave of innovation and replacement as a result of this transition.
