Indian IT firms jump on cloud

Indian IT firms may be forced to look beyond their bread-and-butter offshoring model, as a potential game changer in the form of "cloud computing," the hottest new buzzword in Silicon Valley, floats east.

Software makers are increasingly choosing to host their applications in data centers, allowing customers access via an ordinary Web browser, seemingly from the cloud of the Internet.

Such cloud-based software, also known as Software as a Service, or SaaS, saves clients the cost of buying licenses and running programs on their own computers, while saving the software maker the hassles of deploying its application.

India's marquee tech firms like Tata Consultancy, Infosys and Wipro are aggressively moving into the cloud services business and helping clients implement their own software offerings on the cloud, and most already have a few cloud service offerings.

Cloud services cost less than traditional outsourced services, with savings of between 20 percent to 50 percent depending on the type of service offered, according to market research firms.

This would mean that India's nearly $60 billion outsourcing sector, whose mantra is cost savings, have little choice but to include cloud computing as part of their service portfolio.

IT firms' service offerings help clients build a framework and a platform to host the application, and they operate the cloud computing environment for services like corporate emails and document management services.

India's No. 3 outsourcing firm Wipro looks at cloud computing as a "game changer." Its acquisition of Infocrossing two years back gave it a footing in the technology and is helping bag deals in the infrastructure space.

"Given that the world will head toward cloud, this (Infocrossing) is our natural cloud in the United States," Suresh Vaswani, co-CEO of IT services for Wipro, told the Reuters India Investment Summit in Bangalore. "So if we have to launch infrastructure as a cloud, it will be on the back of Infocrossing."

Wipro has also been building data centers in the country and is implementing private clouds such as its recent partnership with business software maker Oracle.

"To offer the software as a service, companies have to have the basic infrastructure in place, which is the cake without the icing," said Seepij Gupta, manager for software & services and security solutions research at IDC India.

"The icing is the license acquired for the software application, which are ready, but the basic cake still has to be developed," he said, adding that the adoption of cloud computing was increasing with time.

PAY AS YOU USE

The emergence of cloud computing could also usher in a paradigm shift in the revenue models of IT firms, requiring them to shift to a pay-per-use model from their current model of annual or bi-annual contracts.
"Clients want somebody who can put the money to build hardware and product capability, bundle it as a service and make it a pay for use kind of model," V. Balakrishnan, chief financial officer of Infosys, said at the summit.