The new economics of Cloud in India: Turning infrastructure into a strategic advantage

Cloud expenditure in India is increasing at a rate of 25 - 30% yearly, and for many corporations, it has now become the second biggest operating expenditure after the labour force. Nevertheless, in the majority of board meetings, the cloud is still being talked about in technical rather than economic terms. This gap is generating a long-term risk.

During the initial phase of adoption of the cloud, firms promptly transferred their operation to hyperscale platforms for speed and flexibility. What ensued were soaring and sometimes unpredictable charges resulting mainly from data transfer fees, storage operations, backups, networking fees, and over-provisioned computing. The cloud was supposed to be a variable expense, but little by little, it turned into a fixed operational burden. As cloud implementation became permanent, so did its cost.

What the cloud itself is not the problem. The problem is that Indian businesses are not being aligned. Most Indian businesses do not need infrastructure that is optimised for multiple global regions. What they need is consistent performance, data residency within India, and predictable billing. When cloud infrastructure matches real business needs, it becomes possible to control costs, and planning gets better.

Being able to predict is a crucial aspect of cloud economics. Financial departments have a tough time with plans where the usage, based billing leads to drastic monthly swings. This unpredictability hampers the decision-making process, and thus, confidence in expansion plans is lowered. On the other hand, stable pricing policies facilitate accurate budgeting and also provide the possibility for growth without being afraid of cost shocks.

Regulation has changed the perspective of cloud use from a purely technical issue to one of finance. India's Digital Personal Data Protection Act (DPDPA) is going to be enforced from 2027, making data localization and auditability mandatory considerations. Banking, fintech, healthcare, and education are some of the sectors where regulators like RBI and SEBI have already prohibited data hosting offshore. Multi-country data hosting comes with indirect costs that are legal review costs, audit complexity, compliance tooling, and risk exposure. Infrastructure that is designed considering Indian regulatory requirements will over-time lower these concealed costs.

One should also take the reliability question from the standpoint of the economy. Downtime causes a direct loss of revenue, customers' trust, and disruption of the company's operations. CloudPe's infrastructure, for instance, is equipped for multi-rack redundancy and has a 1-2 millisecond failover capability to reduce the impact of a failure. The cost of our VMs is around 1.5 times the average price on the market; however, it is still cheaper than hyperscale providers such as AWS or DigitalOcean.

This decision isn't made by the customers because it is the cheapest, but because the failure cost is higher than the resilience cost. At present, 50-70% of our customers are inclined towards a regional cloud that is managed and hence value guaranteed response times and service accountability the most. This is the reason why CFOs, in addition to CTOs, are getting involved in the making of cloud decisions.

Indian business leaders are offered a realistic pathway to progress. Initially, companies should classify different types of work so that only those whose real needs are to be spread worldwide and the others can be served locally. Then, they should focus on those pricing models that are the most suitable for planning the monthly expenditure. Also, they should check to what extent the compliance headache is just a result of data being stored outside India.

Furthermore, the emphasis of investments should be on reliability, failover, and support rather than on the extravagance of services. Besides, cloud usage should be considered a key business metric that is tightly controlled, rather than merely being measured as an IT cost. Cloud is no longer a subordinate infrastructure. Rather, it has become the economic foundation of modern business.

Companies that see cloud merely as a technical platform will be facing the problem of increasing and uncontrolled costs for a long time. On the contrary, companies that view the cloud as an economic system will be able to protect their margins, comply with regulatory requirements, and scale their business sustainably. Given the present circumstances, using a cost effective cloud infrastructure is more than just a matter of good operations; it is a source of competitive advantage.