Organizations around the world have been seeking more efficient, scalable and cost-effective ways to handle the increasing demand for information technology as it continues to evolve. Public cloud computing has emerged as a breakthrough in transforming how organizations and businesses deal with data and applications.
The public cloud serves as an alternative to traditional on-premises IT infrastructures. Public cloud computing consists of third-party providers providing scalable, on-demand IT services to customers via a network connection. It is frequently considered utility computing, in which computing capabilities are given to customers as needed.
In recent years, Asia Pacific has been leading in the adoption of public cloud services (PCS). A recent report by the International Data Corporation shows the expanding market for public cloud services in the region. According to IDC's Worldwide Semiannual Public Cloud Services Tracker for 2H22, the PCS market in Asia Pacific, excluding Japan and China (APeJC), reached an outstanding $32.5 billion in 2022, representing a year-on-year increase of 25.3%.
The software as a service (SaaS) market maintained its lead, accounting for more than 60% of the entire PCS market share. This segment has proven to be adaptable and simple to implement. The true standout of the year, however, was platform as a service (PaaS), which, although accounting for less than 15% of the entire PCS market share, achieved 45.1% YoY growth. The surge in demand for artificial intelligence platforms, data management software and application platforms fueled the exponential increase of PaaS.
The causes of this growth in Asia lie in the ongoing shift towards digital business models. Businesses are turning to PCS to reduce time-to-market, build data-driven decision-making models, customize and reinvent services, and engage consumers in more dynamic ways. Meanwhile, security and compliance, which were formerly important issues in PCS adoption, have been set aside. Organizations have realized that the public cloud environment may often be more secure and cost-effective than traditional on-premises arrangements.
Global certifications, including industry-specific compliances, have enhanced the security credentials of major PCS providers. This has accelerated PCS implementation, especially in regulated businesses. One example would be in the digital banking sector, where several virtual and traditional banks have resorted to PCS to establish digital banking services while meeting regulatory standards. As a result, finding cloud service providers who adhere to worldwide security standards and laws has become a critical consideration in selecting a vendor.
A lot of factors motivate enterprises to move from on-premises facilities to the public cloud. Among these are diverse workload needs, financial concerns, decreased maintenance costs and enhanced redundancy possibilities. The migration procedure begins with picking a cloud provider and deciding whether to migrate offline or online.
Because of its speed and cost-effectiveness, offline migration, which involves the physical transfer of data using portable devices, is preferred for large data volumes. Online migration over a network connection is appropriate for enterprises with limited data transfer requirements.
The public cloud services market is expected to further grow in the coming years. According to recent Synergy Research Group data, business expenditure on cloud infrastructure services globally reached $65 billion in the second quarter of 2023, a considerable increase of $10 billion over the same time the previous year. Global YoY growth reached 18% over this three-month period, somewhat lower than the previous quarter's 19% and 20% in the fourth quarter of 2022. However, expenditure increased by 3% in Q2 2023 compared to Q1, representing a similar quarter-on-quarter growth rate as the previous year.
Asia Pacific is a significant driver of this growth. Australia, China, India and South Korea recorded YoY expenditure growth rates of over 20% in the second quarter, outpacing worldwide market growth during the same time. These countries have emerged as critical cloud investment engines, demonstrating a high demand for cloud products and services.
According to IDC, the top five public cloud service providers in the region, including Amazon Web Services (AWS), Google, Microsoft, Salesforce and SAP, dominated more than 40% of the market in 2022. Notably, Chinese vendors such as Alibaba Group and Huawei are advancing into Southeast Asia, focusing largely on the infrastructure as a service (IaaS) market but also providing PaaS and SaaS solutions.
Looking ahead, the IDC predicts the global economic situation may have some minor impacts on the PCS market. However, when initiating large-scale cloud initiatives, organizations should focus more on cost efficiency while exercising diligence and care. Automation will take center stage, with technologies such as serverless computing, robotic process automation software and AI/ML tools being used to optimize business and IT operations while lowering costs.
With all these factors in place, the public cloud is poised to continue its growth in the Asia-Pacific region and its precedence around the globe.
