As clients struggle to manage their rising cloud costs, IT service companies are seeing this as growing revenue stream for their businesses. While majority of their clients are already on cloud, IT firms are looking to plug the leakage of cloud spend that experts peg at around 30%.
Analysts said that when cloud came, it was all about moving from fixed cost to variable cost. But now the variable cost has increased so much that clients are increasingly asking IT companies to help them manage their cloud cost.
A recently released report by Infosys, mentions that as companies continue to add new technologies such as Generative AI, Internet of things (IoT), and data analytics, cloud environment will continue to be larger, more complex and more expensive.
Shivnath Babu, co-founder and CTO of Unravel Data, told Fe that while cloud migration saves cost and resources, it is tricky if one is not able to balance between their requirements and spending on the cloud. “Approximately 28% of the clients’ spend is going waste or not spent properly. Many companies are now spending almost 20% more on their cloud budgets every year”.
Recently, LTIMindtree signed a deal with a SaaS company, CAST AI, which it said will help companies save, on average, over 60% on cloud costs as they modernise legacy applications for cloud migration.
Rajesh Gopinathan, former CEO and MD of TCS, said in the company’s annual report of FY23, “We helped clients cope with the challenge of managing cloud expenses. In some cases, it required rearchitecting their application stack to be more cloud native, capable of dynamically ramping up resource consumption during periods of high demand, and automatic ramping down at other times. Elsewhere, we offered our FinOps advisory and cloud managed services to rein in cloud costs”.
Pareekh Jain, founder of Pareekh Consulting, said, “Today the focus has shifted from cloud migration and speed to control the cost over cloud. Clients are increasingly asking service providers to manage their rising cloud cost. This new service offering is now a part of most of the new deals bagged by IT service companies”.