Enterprise cloud spending in Philippines to reach US$2.6bn in 2024, says GlobalData

Digital transformation, increased cloud usage, edge computing and growing international connectivity offer opportunity for Philippine vendors to work with hyperscale providers to grow cloud revenues in the country. Against this backdrop, the enterprise spending on cloud services will grow from US$1.8bn in 2020 to US$2.6bn in 2024, says GlobalData, a leading data and analytics company.

GlobalData’s latest report, ‘Philippines on the Cusp of Cloud Revolution’, reveals that cloud-based service usage is booming in the consumer segment as well with streaming mobile video users set to grow from 53 million in 2020 to 80 million in 2024 while mobile social media users will grow from 75 million to 80 million over the same period.

Each of the leading hyperscale cloud providers, namely Amazon Web Services (AWS), Microsoft Azure and Google Cloud are trying to grow adoption of their services within the market through local partners. Each company is building partner ecosystems within the Philippines and targeting specific verticals such as technology, telecoms and financial services for their IaaS, PaaS, and SaaS services.

Malcolm Rogers, Senior Analyst of Technology at GlobalData, comments: “The Philippines in the future may prove to be a valuable cloud region as the country’s growing digital economy is driving increased cloud usage.  For example, the Philippines is one of the fastest IT business process outsourcing (IT-BPO) markets in the region with BPO companies using cloud-based services to support their operations.”

Hyperscale providers are also expanding their partnerships to include colocation providers to push their edge services (e.g., AWS Outposts, Azure Edge Zones). This allows them to assess the demand before investing in building a cloud region.  For example, Azure offers its full-stack HCI deployable on enterprise data centers through Dell Philippines.

Beyond data center capacity, international connectivity is also important in building a cloud-hub, offering redundant connectivity to global data centers to ensure resilience of operations.  To this end, telecom operators have been doing a good job of increasing their attractiveness to global cloud providers.

Mr Rogers continues: “Operators across the country have built more than a dozen carrier neutral data centers and increasing international carriage capacity to and from the nation by developing undersea cable projects with global partners.”

Beyond the traditional data center, Philippine players have an opportunity to build relationships with the major hyperscale providers around multi-access edge compute (MEC).  The Philippines is one of the early countries in the region to launch commercial 5G services with coverage expanding fast across the country.

Telecom operators in the Philippines can build in compute and storage capabilities at their own network edges, whether that be in local exchange offices, mobile towers, or their own data centers. Integrating edge compute into a wider WAN deployment gives enterprises even more flexibility in terms of where they move applications.

The public cloud providers are already working with carriers to develop carrier edge specific version of their own cloud environments (e.g. AWS Wavelength, Azure for Operators / Azure Edge Zones, Google Mobile Edge Cloud).

Mr Rogers concludes: “Even though none of the major cloud providers have announced plans to build out public cloud regions within the Philippines, the market has plenty of activity in the hyperscale space and as technologies like 5G edge computing evolve and mature there is plenty of opportunity for telecoms and data center players to grow partnerships with the leading hyperscalers.”

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