Microsoft says cloud could ‘outsource’ India’s IT

Cloud services, or software/hardware services delivered remotely through the Internet, may be to Indian information technology companies what outsourcing was to the US IT industry, an official of Microsoft, the world’s largest software company, said.

The company, which on Monday announced it was opening up its four-month-old cloud platform in India to third-party developers, said such services are likely to force Indian IT professionals to ‘upscale’ much as their US counterparts had to, when their work was outsourced over fibre networks to India.

“The cloud will take away some of that regular maintenance role. You have to see this as a continuum across the world. Think of the IT department in the US or Europe, they have been forced to upscale. For them, outsourcing was the catalyst, cloud could be ours,” warned Microsoft’s India director for cloud services, Vikas Arora.

He was speaking at the launch of the company’s cloud platform, Azure, in India.

The company, which has reached out to 22,000 Indian developers in the last six months, is banking on getting its developer community — the largest in the world — embrace its cloud as their delivery platform.

Hundreds of Indian or India-based companies are already selling their products through Microsoft’s four-month-old cloud marketplace for the US called ‘Pinpoint’.

Unlike traditional software, cloud-based products are not ‘installed and run’ by the customer, but are run at large server or computer farms operated by Microsoft or other big firms.

Customers access the functions through the web and typically pay only a monthly usage charge.

Cloud operators design special versions of the existing programmes, such as an automobile-design software, that can accommodate more than one user or one firm at a time instead of the single-user programmes in use today.

As a result, they can, theoretically, serve a large number of companies using just one ‘instance’ of a programme.

Around 75% of the global IT budget is currently expected to be spent just routine maintenance of running applications, due to the multiplicity of installed ‘instances’ even in a single company.

While the cloud-based architecture is good news for most companies as they don’t have to buy or develop their own software or worry about maintaining them, it is also anticipated to make much of India’s current IT service providers — specialised in application development, installation and maintenance — superfluous.

It also threatens the business models of companies such as Microsoft and SAP, which get nearly all their revenues from the sale of packaged software to individuals or companies. For example, Microsoft’s office utility MS Office costs upwards of Rs 3,100 for the student edition, while Google’s cloud-based Google Docs service is cheap enough to be run completely on an ad-supported model.

Arora, however, denied Microsoft has been caught unawares by the cloudburst.

“We laid out our cloud strategy as early as 2004, when we said we are likely to see the evolution of a hybrid model. Between 2004 and 2008, we have been investing in extending our existing products to the cloud,” he explained.   

The company has already extended its email and video-conferencing software to the cloud model, but is yet to extend ‘office’ and enterprise planning applications.

Microsoft said it has got a “very large number of clients” in India who are “very interested” in moving to the cloud.

Nearly all companies in India use Microsoft’s Windows operating system and around 70% of enterprise email solutions work on its ‘Exchange’ platform.

For his partners and other IT services companies, Arora, felt that a transition to cloud as the primary IT delivery mode should be seen as an opportunity to ‘upscale’.

IT departments will have to offer more than just ‘we’ll run the computers for you’ and step into to ‘business enablement’ by offering value added services than can expand the existing business.

Such value added projects, he pointed out, typically gather dust in many companies due to lack of IT manpower resources.

“The opportunity lies in realising that, I have been able to free my capacity up, how can I drive some of the new projects faster? There is no dearth of projects in the pipeline. I have seen organisations with projects in the pipeline for two years because nobody in the IT department could get to that.. CEOs are going to say to the IT team, you have partner with me rather than be specialised resources running my applications and infrastructure,” he said.

The transition also brings with it huge opportunities, especially for enterprising software professionals. Platforms like ‘Pinpoint’ - a one-stop shop to buy all kinds of cloud-based enterprise IT services - give an equal shot to a talented single developer as it does to a big corporation, by providing a platform to showcase his or her ware.

“This basically takes care of the go-to-market.. Anyone who has good idea ... suddenly you can go from one user to a thousand users in a short while. They don’t need to set up a data centre or manage it, they can focus on what they know best. We have already seen it,” Arora said.

The concept of providing a ready-made cloud infrastructure, including an app shop, in return for revenue-shares of upwards of 50% of the sticker price was pioneered by salesforce.com and Apple Inc.

Google and Amazon also offer similar services, but Microsoft is banking on its existing relationships with product developers to drive home its advantage.

With its Windows operating system running on around 90% of the PCs in the world, nearly all non-cloud product companies have an ongoing relationship with Microsoft.