Cloud Adoption Has Accelerated India’s Innovation, Will Drive Generative AI Success: EY-FICCI

Enterprises that fail to adopt the cloud may not be able to maximise benefits of technologies like generative AI.

<div class="paragraphs"><p>(Source: Freepik/kjpargeter)</p></div>
(Source: Freepik/kjpargeter)

Large-scale cloud adoption has accelerated India’s innovation drive, and organisations are significantly investing in cloud offerings to sustain this momentum, a report by professional services firm EY and Federation of Indian Chambers of Commerce and Industry shows.

The report also suggests that organisations that neglect the adoption of cloud may face challenges harnessing the full advantages of advanced technologies such as generative artificial intelligence.

The report—titled India's Cloud and Data Revolution: From Adoption to Enabling Innovation—illustrates how Indian enterprises across various industries are actively scaling cloud technology. The current wave of cloud adoption goes beyond migration and emphasises leveraging the cloud's capabilities to optimise processes, enhance customer experiences and unlock new revenue streams, the report shows.

India Becoming A Global Cloud Hub

According to the report, India is developing into a hotspot for cloud-first businesses, with significant cloud regions situated in Mumbai, Chennai, Hyderabad and Pune. Indian global capability centres have become cloud engineering hubs for global companies, and the potential market for cloud service providers in India has grown. As a result, businesses in the new cloud regions can now access a greater variety of cloud-native services.

Cloud, Data Will Drive Generative AI Success

Leading businesses that were early adopters of cloud computing have switched from relying heavily on cloud services for cost reduction and operational efficiency to using cloud services to create next-generation digital platforms, the report shows. Data modernisation, application modernisation, agility, business growth and innovation are some of the overarching goals that businesses want to accomplish through cloud adoption.

Since generative AI depends on extensive datasets and a robust computing infrastructure—both of which are intrinsic characteristics of cloud technology—its success is closely related to cloud computing. The adoption of generative AI is expected to result in increased data usage and greater consumption of cloud resources.

Scalability, availability of pre-trained models and ease of integration into current applications are some benefits of leveraging the cloud for generative AI. However, a robust framework is essential for the ethical usage of generative AI, taking into account potential issues like data leaks and biased results. It is critical to strike the correct balance between sector-agnostic guidelines and sector-specific considerations, the report suggests.

Cloud To Drive Data Infrastructure Modernisation

The report reveals that enterprises are increasingly using the cloud to modernise their data infrastructure, derive benefits from their data, and acquire fresh insights. Organisations are also looking at achieving business growth, fostering increased collaboration, enhancing workplace productivity, ensuring security, and safeguarding data privacy using cloud.

The report states that 49% of organisations adopt the cloud for data infrastructure modernisation, with larger businesses leading at 55%. Additionally, 78% of businesses are implementing cloud strategies for app modernisation, and 40% of organisations are using the cloud for collaboration and workforce productivity.

Cloud For Data Monetisation And Innovation

The expansion of organisations’ data footprints has necessitated the exploration of newer data monetisation techniques. Shifting data workloads to the cloud offers various advantages, with primary drivers being data monetisation (63%), developer productivity (51%), and innovation and incubation (43%). The results also indicate that cloud adoption helps enable data and analytics capabilities for 80% of organisations.

"With 80% of Indian organisations adopting the cloud to enable a range of business capabilities such as intelligent applications with gen AI, native functional and data products, and highly intuitive orchestration platforms, the imperative is clear—embrace the cloud not merely as a tool, but as an enabler of transformative change,” said Abhinav Johri, partner, technology consulting, EY India.

Challenges To Be Addressed

Although adopting the cloud can generate substantial value, organisations must circumvent certain challenges.

  • Adequate Cost Management: Even as many companies now spend almost 20% more on their cloud budgets every year, almost a third of the cloud budget is misspent. Larger organisations achieve cost optimisation of about 20% from the cloud, while medium and small-scale businesses fall short of meeting their cost-saving goals. Businesses must factor in costs such as fees for data transfer, support, storage, licensing, migration, security and compliance. Only around 10% cost savings were realised by 80% of organisations by adopting a hybrid approach, while 85% of organisations use automatic scaling for cost control.

  • Filling The Talent Gap: Almost 75% of organisations encounter the challenge of finding talent with cloud-native skills in their data infrastructure modernisation journey. To address the shortage, companies can expand their apprenticeship and internship programmes and provide on-the-job training to upskill fresh graduates and build relevant experience. Businesses can also tap into the cloud talent in India’s tier-II and tier-III cities.

  • Increased Cyber Risk: As cloud technology evolves, organisations face escalating threats to security and data privacy. Inadequate threat notifications and alerts, along with misconfiguration of security systems, are some of the major concerns. The report found that data and cybersecurity was a challenge for 53% of the organisations.

Alexy Thomas, partner, technology consulting, EY India, said, “Data and analytics capabilities are significant enablers for approximately 84% of larger enterprises to adopt the cloud. As India's cloud-first companies spearhead innovation and sustainable growth, leadership means charting a course towards more resilient, digitally-driven future; effective data and analytics shall be instrumental."