Between 2015 and 2019, the number of internet users in Southeast Asia increased by 100 million, nearly 40%. As a result, these emerging economies are now more welcoming of digital technologies such as 5G, artificial intelligence (AI), and the internet of things (IoT) in enterprises like e-commerce, banking, and public services.
Cloud adoption is also on the rise to enable this digital wave. IDC estimates the cloud computing market in Southeast Asia will reach $40.32 billion by 2025. According to ISG, cloud services were a record 85% of the IT and business services market in Asia-Pacific in the first quarter of 2021.
What’s driving cloud adoption?
In recent years, countries in Southeast Asia have been working on expanding their digital footprint, becoming more data-driven, higher-performing, and better connected. The pandemic increased pressure on businesses to adopt new technology to support things like remote work, e-commerce, and supply chain management. Along with the much-touted benefits of faster time to market, lower costs, and more resilient infrastructure, the cloud brings a unique value proposition to companies in Asia: an opportunity to scale and leapfrog an entire generation of technology.
Populous countries in the region such as Indonesia and Bangladesh have found scalability a big obstacle from an infrastructure perspective. Cloud has helped them overcome this hurdle. During the pandemic, use of cloud-based communication solutions like Microsoft Teams and Cisco Webex soared, helping hundreds of thousands of users stay connected.
Most of the technology infrastructure deployed in the region is due for a refresh, and the appeal of simpler, easier ways to implement cloud solutions is strong. Organizations are looking at cloud as a way to elimate technical debt while unlocking opportunities for new business lines and revenue growth driven by innovation. Companies are skipping the managed services and outsourcing phase of computing and moving directly to the public cloud, in a bid to reduce infrastructure and technical costs and effort. The rise of hybrid work is also generating significant interest in the adoption of hybrid cloud.
Recognizing the opportunity, several major cloud service providers including Microsoft Azure, Amazon Web Services (AWS), and Google have made significant investments in setting up cloud data centers. Even OTT players like Facebook have joined the fray, investing $1 billion in a data center set to open in Singapore in 2022.
Wipro has also announced the launch of Wipro FullStride Cloud Services and its commitment to invest $1 billion in cloud technologies, capabilities, acquisitions, and partnerships over the next three years. This investment will enable us to help our clients in Southeast Asia adopt cloud-native architectures and technologies. Wipro FullStride Cloud Services will work with clients in the region to better align business and IT with the cloud imperative, create significant business value, and increase competitive differentiation. It will also improve their business agility, resilience, and significantly optimize their technology investments in favor of change and innovation.
Overcoming region-specific challenges
While cloud is gaining popularity in Southeast Asia, challenges to adoption remain, two in particular: data residency laws and a talent crunch.
International large-scale security incidents have increased concerns about data security. Demands for more stringent data encryption and privacy laws are on the rise, especially for cloud because it is so far removed from traditional — and therefore more trusted — models. However, despite cloud providers offering tools to encrypt data, it’s the user’s responsibility to specify what information to encrypt. This creates a major hurdle in new markets that are just warming up to the cloud ecosystem. Executives are often wary of adopting cloud solutions in fear they might be penalized for unknowingly violating data-sharing laws. However, these concerns over data offshoring are abating with major cloud service providers investing in local data centers, ensuring that data stays in the country. Growing interest in enterprise cloud adotion is also triggering policy changes around data residency.
After regulations, the biggest hurdle that companies face is the availability of local talent that is trained in line with industry standards. For instance, in areas like multi-hybrid cloud and security, technology has evolved at a rate with which skill-building isn’t keeping up. According to Gartner, this talent gap is the second most disruptive pressure for companies in the region.
Companies and technology providers are now working with local educational institutes to build talent. Wipro, for example, is training university students in cloud technology and hiring locally to build cloud talent. We are also bringing in practices like Agile and DevOps that are not commonplace in the region but are indispensable to increasingly digital workplaces.
Beyond business: Cloud’s full potential
A study by Oxford Economics suggests that the recent investments in cloud computing may have wide-reaching benefits for the region. The social impact of cloud adoption for financial inclusion, connectivity, and healthcare, for example, could far outweigh the business benefits. Rising demand for cloud computing resources and data centers have already increased demand for local talent. Onboarding, upskilling, and training this talent is expected to also have far-reaching benefits for the socioeconomic climate in the region.
The ongoing digital developments in Southeast Asia highlight the transformative potential in cloud computing. The cloud is a powerful foundational technology that enables users to build more flexible, intelligent business systems. It’s also a catalyst for further development throughout a business, across industries, and in the surrounding communities. This region is still in the early stages of its digital transformation journey, but its investments in cloud technology are building a momentum that seems likely to carry them well into the future.