Cloud Computing Market

Market Overview

The global cloud computing market size was valued at USD 388.47 billion in 2022. It is estimated to reach USD 1,844.99 billion by 2031, growing at a CAGR of 18.9% during the forecast period (2023–2031).

Cloud computing is commonly defined as the on-demand delivery of computer system resources, particularly data storage (cloud storage) and processing power, without the user's direct administration. Large clouds frequently distribute their functions across multiple locations, each considered a data center. Cloud computing relies on the utilization of shared resources to achieve coherence. It typically employs a pay-as-you-go pricing model, which can reduce capital expenditures but may also result in unexpected operating expenses for users.

Cloud computing technology provides cost savings and enables all network devices to access applications from any location and at anytime. Cloud computing offers numerous advantages over on-premises hardware infrastructures, including quicker deployment, lower costs, scalability, support for mobile devices, disaster recovery, and less IT staff burden for system maintenance.

Market Dynamics

Global Cloud Computing Market Drivers:

Increased Adoption of Cloud-Based Systems

A majority of large enterprises are now moving toward cloud-based deployment. Nearly 70% of the businesses already moved towards cloud-based computing for a section of their services due to cost-savings associated with cloud storage, flexibility and scalability, data security, data storage, and team collaboration. Cloud systems simplify communication between organizations, providing a streamlined solution for managing business operations.

Furthermore, key players are expected to offer several subscription-based models in cloud deployment, which help reduce the total cost of ownership of the cloud solution. These benefits associated with the ease of implementation and a lower cost of ownership are expected to boost the demand for cloud computing over the forecast period, driving the market.

Increasing Adoption of Technologies

Many organizations invest in big data, IoT, artificial intelligence, and 5G technologies to obtain valuable business insights for decision-making. The adoption of big data technologies is increasing owing to various benefits, such as data integration, data segmentation, and business intelligence. The increased need for analytics and big data technologies in cloud computing creates numerous opportunities for the market to grow further.

Additionally, industries such as manufacturing, IT and Telecom, and media and entertainment have accelerated adopting cloud computing, 5G, machine learning, and artificial intelligence. According to a survey by the Institute of Electrical and Electronics Engineers (IEEE), the global pandemic will have accelerated the implementation of IoT (42%), video conferencing (35%), and augmented and virtual reality (35%) technologies by November 2020, thereby driving the cloud computing market growth.

Global Cloud Computing Market Restraint:

Data Security and Data Privacy

Numerous security concerns related to cloud-based professional services, such as data breaches, hijacking of accounts, insider threats, malware injection, insecure Application Programming Interfaces (API), insufficient due diligence of technology, and data loss, are expected to hamper the market growth. Many organizations upload sensitive data, such as intellectual property, to the cloud, due to which there is a high possibility of data theft. The expansion of cloud-based services has enabled large and small and medium enterprises to store data on the cloud easily. However, it has also made it easier for hackers to illegally access software and malware owing to the cloud's high storage capacity and lack of security, thereby restricting market growth.

Global Cloud Computing Market Opportunities:

Growing Investment in Cloud Infrastructure Development

Cloud computing is amongst the fastest-growing technologies in developed and developing countries, and its growth has accelerated dramatically in 2020. Since the global COVID-19 pandemic, nearly every industry has migrated or plans to migrate its operations to the cloud. Cloud services are now an indispensable catalyst for businesses seeking digital transformation. For instance, Accenture Solutions Pvt. Ltd. developed Cloud First in September 2020 with an investment of $3 billion to accelerate cloud adoption and digital transformation.

Additionally, in response to the COVID-19 pandemic, prominent market players are expected to increase their investment in developing data centers across the globe in the future years. For instance, Amazon.com, Inc. launched a cloud data center in Italy in April 2020 during the COVID-19 pandemic. The new data center will facilitate remote learning and employment and facilitate research. Therefore, the increasing investment by cloud service providers in developing data centers is anticipated to generate significant market growth opportunities.

Regional Analysis

North America Dominates the Global Market

Based on region, the global cloud computing market share is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. 

North America is the most significant global cloud computing market shareholder and is estimated to exhibit a CAGR of 18.1% during the forecast period. North America is estimated to dominate the cloud computing market through the forecast period owing to early adoption by large organizations for reliability enhancement and product quality. The U.S. business sector prioritizes digital transformation and is often regarded as an early adopter of technologies, i.e., big data analytics, Augmented Reality (AR), Artificial Intelligence (AI), Virtual Reality (VR), machine learning, 4G, 5G, and LTE. U.S. businesses are progressively adopting various technologies, contributing to the expansion of the cloud computing industry.

Additionally, the U.S. is the center of the global technology industry, with corporations such as IBM Corporation, Microsoft Corporation, Oracle Corporation, and many others. The existence of Google, the most successful cloud service provider, demonstrates the viability of large web applications delivered via the cloud. Microsoft, which is actively working to offer its services on a cloud-based infrastructure, is one of the industry's primary drivers in North America.

Europe is predicted to exhibit a CAGR of 18.4% over the forecast period. Europe is forecasted to have a significant market growth rate during the forecast period. The increasing adoption of cloud solutions in industries such as BFSI, IT and Telecom, manufacturing, retail and consumer goods, and media and entertainment are projected to boost the market growth. In addition, government and private sector investments drive the market's growth to accelerate cloud adoption across the globe. For instance, in February 2022, SAP SE, a German software corporation, launched a cloud-based platform for domestic data processing.

Asia-Pacific is anticipated to grow exponentially over the forecast period. The surging demand for cloud-based solutions in the manufacturing and healthcare industries drives the expansion. The rapid economic development of India and China, coupled with the emergence of local companies such as Alibaba Group, accelerated the regional market's growth. Demand for cloud computing has increased in India due to initiatives such as Make, which has made substantial manufacturing sector investments. In addition, hyper-scale cloud providers such as Amazon.com Inc., Google LLP, and Microsoft Corp. are constructing data centers in Thailand and Indonesia to satisfy government data sovereignty requirements. Demand for smart Electric Vehicles (EVs) is also expected to increase, along with internet penetration and digitalization. For instance, Google partnered with NASSCOM to launch a new cloud computing course in India in September 2022.

Latin America and the Middle East and Africa will witness tremendous growth in the upcoming years. Governments like Israel, Brazil, and Mexico have boosted their investments in emerging technologies, including artificial intelligence (AI), 5G, machine learning (ML), big data, cloud computing, and others, which are thought to be the cause of the rise.

Segmental Analysis

The global cloud computing market share is bifurcated into service, workload, deployment, enterprise size, and end-user.

Based on service, the global cloud computing market is divided into IaaS, PaaS, and SaaS. 

The SaaS segment is the most significant contributor to the market share and is anticipated to exhibit a CAGR of 18.5% over the forecast period. The SaaS allows customers to access applications running on cloud infrastructure from several end-user devices. In this case, the SaaS service enables users to control a limited number of user-specific application settings. SaaS is gaining popularity due to the availability of diverse software with feature-rich solutions that can be accessed remotely. It is a model that offers on-demand software to users. In addition, remote working has triggered massive demand for SaaS services that help with collaborative working to access previously centralized data and intelligence. Moreover, SaaS offers a pay-as-you-go model that gives businesses more flexibility, options, and web-based subscriptions to remotely access the software.

Based on workload, the global cloud computing market is segmented into application development and testing, data storage and backup, resource management, orchestration services, and others. 

The resource management segment is the largest revenue contributor to the market and is estimated to exhibit a CAGR of 18.5% over the forecast period. The resource management techniques focused on sharing cloud resources among multiple users. Resource management functions can be accessed by a cloud administrator employed by a cloud consumer. Resource management helps businesses coordinate IT resources in response to cloud consumers' and providers' management actions. It provides access to functions for cloud resource administrators managed by cloud service providers. In addition, resource management offers APIs that enable cloud providers to build remote administration systems and provide resource management controls to external cloud resource administrators. Resource management enhances system performance and satisfies users' requests in cloud computing.

Based on deployment, the global cloud computing market is bifurcated into public, private, and hybrid deployments. 

The private segment owns the highest market share and is predicted to exhibit a CAGR of 19.5% over the forecast period. Private cloud solely offers computing services over a private internal network or internet and is only provided to selected users instead of the public. It provides businesses with several benefits, including scalability, self-service, and elasticity, along with offering additional customization and controls hosted over an on-premise computing infrastructure. Private clouds also deliver higher privacy and security through internal hosting and firewalls, ensuring high-level data protection to third-party providers.

Based on enterprise size, the global cloud computing market is bifurcated into large enterprises and small and medium enterprises. 

The large enterprise segment dominates the global market and is estimated to exhibit a CAGR of 17.8% over the forecast period. A large enterprise is a commercial company with an employee strength of 500 and above. In order to spend less time on routine tasks and more time making strategic decisions, many large businesses use cloud computing solutions. Cloud computing enables organizations to offload mundane tasks to technology that can complete them more efficiently. Therefore, surging adoption in large enterprises to ease the operation process is estimated to support segment growth. The rising number of large enterprises across developed and emerging nations will surge the demand for cloud computing services over the forecast period.

Based on end-user, the global decorative coating market is bifurcated into BFSI, IT and telecom, retail and consumer goods, manufacturing, energy and utilities, healthcare, media and entertainment, government and public sector, and others. 

The BFSI segment is the highest contributor to the market and is anticipated to exhibit a CAGR of 17.5% over the forecast period. The Banking, Financial Services, and Insurance (BFSI) sector has always strongly emphasized delivering a positive customer experience and quick response to changing markets and technological demand and has been aggressively adopting cloud computing. The BFSI sector has witnessed an increase in online banking activity, which has prompted the lending sector to adopt digital transformation, with cloud computing playing a crucial role in this strategy.

Cloud computing has accelerated business across the BFSI sector and helps organizations reduce costs, stimulate innovations, and improve client relationships and flexibility. The COVID-19 pandemic has transformed the way people interact and do business daily. Technological advancements have continued to influence the adoption of cloud-based services across the BFSI sector.

Recent Developments

• July 2023- Akamai Technologies, a provider of content delivery networks, opened a new cloud computing facility in Chennai to meet the requirements of modern applications requiring high performance, low latency, and global scalability. After Mumbai, this is the company's second cloud computing facility in India.

• July 2023- DigiBoxx, a provider of digital file sharing and cloud storage services, introduced a new data storage solution for corporations and individuals. The domestic software as a service (SaaS)-based digital storage platform Megh3 announced in a press release that it will provide customers with rapid, simple, elastic storage solutions at attractive pricing, combining simplicity and affordability.