Boyden Executive Search

As cloud providers vie for customers in India, one of the world’s fastest-growing web services markets, Microsoft and Reliance Industries are pairing up.

Reliance, one of India’s biggest conglomerates, announced a 10-year alliance with Microsoft’s Azure cloud platform. Chairman Mukesh Ambani said that as part of the agreement, Jio will build data centres across India, to be hosted on Azure. “We now have the capability to develop truly India-native solutions, including speech recognition and natural language understanding for all major Indian languages and dialects,” he added.

Analysts say that Reliance getting into the business of web services such as website hosting and data storage will pose new challenges to big incumbent cloud providers, including Amazon and Google. Amazon Web Services (AWS) is currently the dominant player in the Indian cloud market, which is expected to grow at an average rate of 23% annually over the next five years, to around $5.6 billion.

Reliance famously disrupted India’s telecoms industry when it launched the Jio mobile network in 2016, using aggressive pricing strategies including cut-price data plans. Subsequently Reliance Jio had the fastest ramp-up ever, gaining 16 million subscribers within the first month. A wave of consolidation ensued, and some rivals were pushed out of the mobile market entirely. Jio is now one of India’s top-three mobile network operators.

Ambani sees Jio as a technology company, and has used it as a launching pad for web-based services such as ecommerce and media. The Microsoft partnership could give it a foothold within India’s thriving start-up scene. Echoing Jio’s mobile launch, an aggressive pricing strategy is in the offing. According to Ambani, Jio will provide free connectivity and cloud infrastructure, and offer a “bundle of connectivity, productivity and automation tools” to micro, small and medium businesses for what Naveen Mishra of Gartner described as “the rock bottom price.”

Acknowledging the impact this will likely have on the market, Satyajit Sinha, an analyst at tech consultancy Counterpoint said, “Other cloud players like AWS and Google will have to come up with new, perhaps cheaper pricing models for India.” These providers offer similar services at much higher prices, and as Reuters reports, analysts say that Ambani’s move could spark a price war in the Indian cloud market.

Reliance could also gain an advantage from India’s forthcoming data privacy law, which will emphasize local data storage. In addition, the country’s central bank has asked foreign firms such as MasterCard and Visa to store payments data exclusively in India. “Companies that have a fairly mature IT adoption or those that are playing with a lot of Indian consumer data, they might prefer to move to (Reliance) because this data is guaranteed to be stored locally,” said technology advisor Krishna Iyer, a former senior executive at cloud services firm Akamai Technologies.

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