India-based global information technology and consulting company Wipro (WIT) announced its commitment last week to invest $1 billion in cloud technologies, capabilities, acquisitions, and partnerships over the next three years, as well as the launch of Wipro Fullstride Cloud Services. These announcements come amid a post-pandemic boom in adoption of cloud platforms and capabilities by companies around the world.
“I think cloud was growing fast, even pre-COVID,” Rajan Kohli, president of Wipro’s Integrated Digital, Engineering and Application Services (iDEAS) business line, said in an interview with Yahoo Finance. “But post-COVID, it's growing much faster. I do not think, when we go into a meeting with the CIOs or CEOs, [that] we have to necessarily justify why they need to go to cloud. [The] conversation, really [is more] about ‘how?’ and ‘how much time will it take?’ and ‘what parts of my business should I move to cloud?’”
As millions began working from home and companies were forced to seek out online productivity and collaboration services to maintain business operations away from the office, cloud solutions became a staple during the pandemic for small businesses and large enterprises alike.
Indeed, "worldwide end-user spending on public cloud services is forecast to grow 23.1% in 2021 to total $332.3 billion, up from $270 billion in 2020," according to the latest forecast from Gartner Research. “The events of last year allowed CIOs to overcome any reluctance of moving mission critical workloads from on-premises to the cloud,” said Sid Nag, research vice president at Gartner, in a press release. “Even absent the pandemic there would still be a loss of appetite for data centers.
“Different analysts give different numbers in terms of what percentage of business is already in cloud. My guess is about [30% to 45%] of the global workloads among large clients are already in cloud,” Kohli said. “But where it should get to—my guess is about 75% of these workloads can get to cloud and this will happen over the next two to three years.”
According to Kohli, Wipro’s $1 billion investment will go toward three key areas in the company's plan for cloud capability expansion. One is facilitating potential acquisitions of companies in the data, design, marketing, and consulting spaces. The second area is to fund teams aligned with the large cloud service providers (CSPs) like Microsoft Azure (MSFT) and Google (GOOG) that will be “specialized around these large environments,” Kohli said. The third area is building IP and reusable components to help differentiate Wipro against the market.
“To give you an example, if you're moving, let's say, your data environment from Teradata (TDC) to [the] Microsoft environment, we already would have many reusable components that will reduce your time to market and significantly reduce your risk,” Kohli said. “And that's where our investments in differentiations [go towards].”
Wipro and the future of the cloud space
Headquartered in Bangalore, India, Wipro helps other companies migrate operations to the cloud through its Wipro FullStride Cloud Services initiative. The company employs over 79,000 cloud professionals and has secured deals with Telefónica Germany, Verifone, E.ON (XETRA: EOAN.DE), and Metro AG (XETRA: B4B.DE) over the past 12 months.
According to Kohli, Wipro’s client base lies largely in the Global 2000—around 55% of the company’s business comes from the Americas, around 25% comes from Europe, and the remainder comes from the rest of the world. He said that Wipro’s cloud business model is based on advising clients on their transition to cloud platforms, migrating and transforming clients’ applications to the cloud, building new applications within the cloud, enabling clients to operate cloud infrastructure, and managing multi-cloud environments for clients.
Kohli also noted that the security of cloud computing has, in recent years, been generally accepted as being very sound.
“There used to be a time when people used to feel that private environments are more secure than cloud,” Kohli said. “And nowadays, I think the common belief is that, given the investments that the cloud providers can put into security, [CSPs] can generally de-risk the data centers much more than what a typical private data center can secure.”
As for broader market conditions in the technology space, particularly supply chain disruptions and shortages related to semiconductor chips, Kohli doesn't think the materials crunch will have lasting implications on larger cloud providers.
“In terms of impact on cloud, I feel that many of these large cloud providers will have better bargaining power,” Kohli said. “And in some cases, they have actually lesser dependence on certain types of chips. But overall, they will have better bargaining power than the individual, private players. So the overall shortage of chips does impact the technology industry, but do I think that impact will be more on private players than on these large cloud players? Yes.”