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3 things to expect from cloud computing in 2022

In the years ahead, the cloud will strengthen its position as the future of business technology

2021.12.23

Cloud readiness has enabled organisations in Asia to maintain the smooth provision of services and transition to new ways of doing work. 

Covid-19 represents an inflexion point for cloud computing, highlighting its role in driving digital transformation. Amid lockdowns and social distancing mandates, the cloud has been instrumental in enabling companies across Asia to adapt to new ways of work and the accelerated growth of digital customer interactions. 

According to a 2020 McKinsey Global Survey, the average share of customer interactions on digital channels increased from 36% in December 2019 to 58% in July 2020—a surge equivalent to three years of normal, pre-pandemic growth. The ability to scale IT resources vertically (e.g., increasing CPU power) and horizontally (e.g., server capacity) on the cloud provides the agility to meet these spikes in market demand efficiently. 

Unsurprisingly, the adoption of cloud technologies in Asia Pacific (APAC) has also increased since the pandemic began.

Cisco and Boston Consulting Group’s (BCG) The Future of Cloud in Asia Pacific report forecasts overall cloud spending in the region to reach US$200 billion by 2024. Across ASEAN, emerging economies like Indonesia, Malaysia, the Philippines, and Vietnam are expected to lead the pack in terms of cloud spending growth at a CAGR of 25% by 2024.

As new operational demands introduced by the pandemic cement cloud computing’s position as the future of business technology, we look at three trends to expect in this area in 2022 and beyond.

1. Growing public cloud will contribute US$258 billion to APAC economy

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According to a Gartner forecast, global end-user spending on public cloud services is expected to grow by 18.4% in 2021, reaching $304.9 billion. Much of this growth will be driven by organisations across APAC; Cisco and BCG forecast public cloud to account for 40% of organisations’ IT overall IT spend in 2024—up from 27% in 2020. Meanwhile, Deloitte reports that between 2015 and 2024, public cloud services in APAC will contribute US$258 billion to the region’s economy—equivalent to 0.8% of the GDP. 

APAC companies are also more willing to embrace the public cloud, compared to their counterparts elsewhere in the world. An IDG Connect report shows that cloud services accounted for 85% of APAC’s IT and business services market in Q1 2021—the highest level of cloud coverage in the world. By contrast, the Americas and Europe’s IT share in the cloud sit at 60% and 45%, respectively.

In the near future, more APAC companies will skip managed services and IT outsourcing, and go straight to the public cloud—partly driven by the promise that the cloud will level the playing field.

2. AI hits the mainstream, with 71% of APAC organisations seeing it as a necessity to succeed

Asia is an AI powerhouse and home to 1,300 AI startups that have collectively raised more than US$26 billion since 2015  According to a Cognizant study, 71% of APAC organisations see AI as an essential component of business success.

Cognizant goes on to explain that whilst the governments of China, Singapore and India have shown great interest in AI with their ambitious national strategies, organisations in the private sector are taking a more measured approach to AI. Case in point: 55% of APAC organisations consider themselves to be “beginners” or “implementers”.

Southeast Asia represents a region offering particularly high potential for AI development and growth, with AI market revenues expected to hit $12.4 billion by 2025. Whilst the region’s emerging economies are in the very early stages of AI adoption, initiatives in AI and machine learning are forecasted to add nearly $1 trillion to the region’s GDP, according to a Kearney study.

3. Cloud talent shortage to lead to higher hiring costs or cost-effective outsourcing

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Whilst enterprise confidence in the security of the cloud is at an all-time high, organisations raring to migrate their IT infrastructure to the cloud in 2022 and beyond may find their plans stymied by a lack of IT talent. 

Gartner’s 2021-2023 Emerging Technology Roadmap shows that the majority of IT executives consider the lack of talent with cloud skills as the greatest barrier to deploying cloud-based technologies for strategic use in their organisation. This is a problem that has plagued companies for years. As early as 2018, McAfee reported that 40% of organisations with cloud skills shortages have had to delay their cloud adoption. 

The situation is much the same in Asia. About 73 per cent of decision-makers across APAC admitted to critical skills gaps in their IT departments. Cloud proficiency was the second-highest priority for hiring, exceeded only by cyber security. As a result of these skills gaps, APAC IT professionals were now being paid about 10.2 per cent more (an average of US$6,435) , compared to 2020.

Even Singapore, which has historically been a hub for top tech talent, is experiencing a skills crunch. The country will need 1.2 million digital workers with skills such as cloud architecture design by 2025—a 55% increase from current levels—to stay competitive. 

Instead of hiring expensive in-house cloud talent, savvy companies can effectively deal with this skills gap by outsourcing to trusted providers like T-Systems. Outsourcing cloud talent can connect companies to up-to-date expertise that can help support their cloud and hybrid architectures, minus the high costs of headhunting increasingly rare talent. 

The shift to outsourcing cloud talent is already happening: the value of IT outsourcing (ITO) contracts for cloud-based as-a-service saw a 29% increase to US$405 million as of 2Q 2021. 

Emerge stronger in the next normal by being cloud-ready

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In 2022, we will continue to see an increase in organisations bringing their workloads and mission-critical applications to the cloud. As the pandemic emphasised the business value of maintaining agility and business continuity during periods of disruption, we predict that cloud-readiness will be key to staying competitive. 

However, there is no one-size-fits-all approach to creating and implementing a cloud roadmap. Business and IT leaders across Asia must take the time to understand their cloud computing needs and weigh the benefits, challenges, and desired outcomes of cloud migration. 

When transitioning to a cloud-first environment, it’s important to work with a provider with a proven track record. At T-Systems, our cloud solutions, dedicated service and collective expertise are helping businesses prepare for the future of technology. Get in touch with our team to learn more.

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