With the Cloud service market getting bigger in India, Chinese tech giant Alibaba, a late entrant in the Indian market, is upping its plan for a bigger battle. Alibaba Cloud, the cloud computing arm of Alibaba Group, may soon steal the thunder from American technology companies such as Amazon Web Services (AWS), Microsoft (Azure), IBM, and Google and Chinese arch-rival Tencent, which are leading the market here.
The public cloud service in India is set to double in the next two years. It is estimated to reach the market value of USD 4.1 billion by 2020, from the existing USD 2.5 billion. According to a report by research and advisory company, Gartner, the highest growth will continue to be driven by infrastructure as a service (IaaS) which was projected to grow at 49.2 percent in 2017, followed by 33 percent in software as a service (SaaS) and 32.1 percent in platform as a service (PaaS).
Earlier this year, the company set up its first data centre in Mumbai and has bigger clients like Reliance Entertainment and HCL Technologies. In an interview with The Passage’s managing editor Prabhu Mallikarjunan, Alex Li, general manager of Alibaba Cloud Services for the Asia Pacific region says, the company will not be successful in APAC without success in India. He talks about the future plans of Alibaba Cloud in India.
The Passage: Why is India a key market for Alibaba Cloud?
Alex: We already have presence in Europe, America and Asia Pacific and we are providing best coverage among the global service providers. India is a key market for Alibaba Cloud for reason like- It is attractive in terms of market size, growth prospects in the near future, as well as for talent pool. The market has grown over 80% in 2018 compared to previous year. Without success in India, Alibaba Cloud will not be successful in Asia Pacific.
The Passage: Don’t you think Alibaba entry into the segment is a bit late? How will you leverage that?
Alex: I think we are right on-time. If we look at cloud services technology, apart from the basic service and products of all companies, there are a lot of new solutions coming out every day and Alibaba Cloud has invested heavily on research and development. We have decided to invest USD 15 billion in the next 3 years (till 2020). We have a very strong capability in big data, and we have cloud computing, IoT, Blockchain…We have made very good progress and many customers look at Alibaba Cloud as one of the leading tech companies. So we don’t think we are late. Less than 15% customers have actually started using cloud services in India and there is a big potential. We also have a very unique positioning. Alibaba is very strong in ecommerce and we have developed a lot of solutions based on our own understanding. We have logistics business, we have retail business, and we are into fintech and others segments. We have a very unique solution compared to others. In other words, we have added value to our current customers and sometimes we will not compete with others.
The Passage: How do you put forward in terms of your competition with IBM and other players?
Alex: Normally we will not make comments on our competition. We focus on our customer requirements and our business strategy. In India, in the next one to 2 years we will be focusing on building our foundation-- including team, data centre, product portfolio and brand awareness. This is something we want to hold up in this country.
The Passage: Who are your big customers in India so far?
Alex: We did get some big customers like Reliance entertainment which launched their service in more than hundred countries, that was extremely successful for us. Then they had their gaming platform WWE Mayhem which was quite popular and it was hosted on our platform. We also have HCL, the IT services, solutions and distribution company as a strategic partner.
The Passage: How is India helping for Alibaba Cloud’s talent pool?
Alex: India is the best place to find talent and you can find so many intelligent people in this area (Cloud service). In 2018, we are going to train 1,000 people, including the sales professionals and technical skilled force so that we build our foundation for those people who know our product, solutions. They are going to have more customers, particularly the enterprise customers and small businesses. So far we have trained about 100 people in Q1. While I may not reveal the employee strength, we have offices in Gurgaon, Mumbai and Bangalore and we will ramp up the teams there.
The Passage: Any plans to open more data centres apart from the existing one in Mumbai?
Alex: Yes we have plans, but would not like to reveal the details now.
The Passage: How much will Alibaba Cloud invest in India over the next two years?
Alex: We are going to invest heavily on infrastructure including data centres, networking, to make sure our clients’ needs are met. The next big investment will be on people. We will definitely develop more local talents to partner with local players and to serve the customers. And third will be focusing on partnership. Different cities have scenarios in India. In Bangalore we see startups are active, in Mumbai there are a lot of enterprise customers from the financial sector as well as the media and the entertainment businesses which are active, in Delhi there are more public sectors and you can find all the verticals of different industries adopting for Cloud. So, we want to make sure that each and every customer is served and taken care of.
The Passage: Pricing plays an important part in the Indian market. How Will is Alibaba going to position itself?
Alex: I partially agree. Besides cost, they also look for value. So I would say value will be more important for any brand to be successful. Alibaba Cloud service has developed many special capabilities in terms of video technologies and the mature solutions which are different from others' offerings. We will focus on adding values, while our customers are ready to pay as they want to benefit from their investment.
The Passage: Is there a specific model, what works for the Indian ecosystem?
Alex: If we look at the ecosystem, I think that PaaS and SaaS models are popular for different levels of services. But if you look at the Indian market, Iaas (infrastructure) is very important and it accounts for the largest pie in the entire business. However, we also see the PaaS and SaaS customers are migrating to public cloud. Recently we also launched some specialized software services and they were very successful. Going forward, we want to do more with our future partners. IasS is something we do not want to miss.**
The Passage: What is the percentage of IAAS?
Alex: Globally, IAAS accounts for more than half of our business. The situation is similar in India.
The Passage: Is there any kind of special agreement with Paytm, the Alibaba invested company, for cloud service?
Alex: Actually, we are working quite closely with Paytm. Definitely, we look at them as a customer and partner, both. Customer means they have some special internals--they have different businesses like they have Paytm payment, PaytmMall, PaytmTravel and more. They have different business scenarios and we can help them develop solutions. The other part is that Paytm has established their brand in the country very well so they have a lot of partners and merchants. We will launch some uniform programs in the country and we will also work with specific customers to do some customised programs. It’s not only with Paytm, but it can be with any partners in the country.