The Growth of APAC’s Cloud Market and How It Impacts Indonesia’s Economy

neuCentrIX - 01/12/2021 10:00

The COVID-19 pandemic has pushed organizations to adjust and reinvent the way they run their businesses through digitalization. As they strive to stay agile and competitive, many of these organizations have resorted to technology-enabled business models and operations. The cloud has come as one of the foundations of this global digital transformation, leading to the growth of the cloud market around the world, including in the Asia Pacific region.


The Growth of the Cloud Market in APAC


According to a report by Cisco and Boston Consulting Group (BCG), the overall cloud spending in APAC is expected to reach US$200 billion by 2024, with investment into the cloud growing at a CAGR of over 20% since 2018. IDC affirms this by stating that the cloud computing market in Southeast Asia is expected to reach US$40,32 billion by 2025. In the Worldwide Public Cloud Services Spending Guide, IDC also states IaaS has been the top contributor to the overall public cloud spending, and is expected to remain the highest throughout the forecast. SaaS has been placed as the second largest, followed by PaaS in third place.


In the APAC region, Indonesia is expected to be one of the leading countries in terms of growth of investment into cloud services, both public and private. Another report by BCG states that Indonesia’s public cloud market represents one of the fastest growing markets in the region, with a projected CAGR of 25% since 2018, from US$0,2 billion in 2018 to US$0,8 billion in 2023. Despite various challenges that may hinder the development of the cloud sector — gaps in organizational capabilities, lack of clear understanding of data privacy features, and lack of robust network infrastructure, the market promises a great potential to grow.


The Impacts on Indonesia’s Economy


The rise of cloud computing has added value to the country’s economy. According to BCG, public cloud is expected to drive a cumulative GDP impact of US$36 billion by 2023. Moreover, the rise of public cloud usage in Indonesia is expected to create 70,000 direct jobs by the same year. About 47,000 of the jobs will be in non-digital roles (sales, marketing, HR, finance, logistics, and operations) and another 23,000 will be digital jobs — 3,000 of which will be with cloud service and IT system providers and the remaining 20,000 within industry verticals.


Cloud technology also offers agility, reliability, scalability, and availability which are not only essential in every organization’s digital transformation journey, but also vital to drive new business ideas, leading to the increasing number of startup companies. Indonesia currently has seven tech unicorns, including GoTo, Traveloka, and Bukalapak. BCG states that these startups have relied on the public cloud to rapidly grow and scale their businesses, powered by cloud-enabled advantages such as faster time to market and the ability to apply AI and machine learning. Besides tech companies and other digital native businesses, financial institutions, media players, and retail corporations have also been actively using the cloud.


Another impact of these high growth prospects is the fact that Indonesia has attracted many of the world’s leading cloud service providers to set up their cloud regions in the country. Google Cloud and AliCloud have established their data centers in Indonesia while Microsoft Azure and Amazon Web Services are set to launch their data centers by early 2022.


In conclusion, cloud adoption is no longer optional for majority businesses in Indonesia, and organizations should accelerate their adoption process to stay agile. However, there is no one-size-fits-all solution in the cloud adoption roadmap. Therefore, it’s important for them to establish their objectives and assess their capacity before setting their short-term and long-term strategies.