Microsoft’s thriving cloud business and its commitment to further investment present a new avenue for Indian IT firms like TCS, Wipro, Infosys, and HCL Tech to enhance their earnings, according to analysts. In the quarter ending June 30, the Satya Nadella-led company reported earnings that closely aligned with estimates, achieving a revenue of $51.87 billion, slightly below the predicted $52.44 billion by analysts from finance firm Refinitiv.
The robust performance for the quarter was primarily attributed to the strength of Microsoft’s cloud computing segment. Amy Hood, Microsoft’s Executive Vice President and Chief Financial Officer, highlighted a 25 percent growth in commercial bookings for Microsoft Cloud, generating $25 billion in revenue, a 28 percent year-over-year increase.
Looking ahead, Microsoft’s CEO, Nadella, expressed the company’s aim to secure substantial Azure deals of $100 million and $1 billion for the next quarter, with Indian IT firms potentially claiming a significant share due to their dominance in services within the sector.
The positive trajectory in Microsoft’s cloud revenue holds promising implications for Indian IT companies, particularly those collaborating with Microsoft Azure technology to deliver modernization services for businesses. In India, major IT players such as TCS, Wipro, and Infosys have partnerships with Microsoft to provide Azure services to clients.
Cloud computing, functioning as the Internet, involves accessing remote resources over the Internet. Indian IT companies serve as providers of cloud computing services, managing these services for their clients. While Microsoft Azure and Amazon’s AWS collectively dominate India’s cloud computing market, Azure is particularly suited for enterprise applications, whereas AWS excels in the e-commerce sector.
The surge in Microsoft’s cloud revenue suggests growing client trust in the platform, signaling an increasing demand for cloud services in the market. Analyst Deven Choksey anticipates this trend leading to a boom in revenues for Indian IT companies.
Microsoft’s focus on Indian IT firms is evident in its support for Azure consumption, with dedicated Microsoft-focused Business Units within many Indian IT companies. The rise of cloud computing in India is reflected in estimates by the International Data Corporation (IDC), projecting the Indian public cloud services market to reach $13.5 billion by 2026, with a compound annual growth rate of 24 percent from 2021 to 2026.
NASSCOM’s report indicates India’s current standing as the third-largest market with nearly 608,000 cloud experts across all sectors. The Economic Survey 2022 emphasizes that IT exports, accounting for 18.4 percent of Indian services exports, are fueled by digital transformation and increased use of cloud technology in the post-pandemic era. Indian businesses adopting a “cloud-first” strategy contribute to the remarkable growth of the country’s cloud computing industry.