SAP's India Cloud Rising Over 50%, Company to Focus on Smaller Businesses

The markets for SAP are growing in India over 50%. The cloud revenue rise 50% with increasing adoption from mid-market enterprises. It is the Europe’s biggest technology company by market capitalization

“To give you a directional view, our cloud business is actually growing at about greater than 50-60%...because our base is (small and) increasing,” Manish Prasad, president and managing director of SAP Indian Subcontinent, said to ET.

Last week, the German software company informed a 25% year-on-year increase in its overall cloud business for the second quarter ended June at €4.15 billion (around Rs 3,700 crore). Its total revenue that includes software enterprise solutions, cloud and software business, grew by 10% to €8.29 billion (around Rs 7,500 crore).

The software maker also called out its cloud backlog revenue at €14.8 billion (approximately Rs 13,400 crore) that provides predictability or visibility of revenue for the next four quarters.

“Brazil, Canada, Germany, India, Japan, and South Korea had outstanding performances in cloud revenue growth while China, the US, and Saudi Arabia were particularly strong,” SAP told in its quarterly statement.
 

However, India still remains a somewhat small market for SAP, among its top 10-15 markets. In India, SAP is also investing in data centres with presence across Chennai, Hyderabad, Mumbai and Pune.

“Our focus on adoption and success of our platforms has become the core of our game plan.” Prasad said, adding that SAP is helping its customers unlock true value of their investments with its platforms linking it to their businesses’ key performance indicators.

In India, Prasad said, SAP’s cloud business is growing both through public sector undertakings (PSUs), which is a huge market currently accounting for around 17-18% share, and through large enterprises and their ancillary units.

Besides auto, steel and cement sectors, the company look forward to ride on the manufacturing wave, focusing on mid-market enterprises.

Highlighting that India’s impact on the global supply chain is unprecedented, Prasad said about eight out of 10 customers of SAP are from the mid-market space. “Roughly, about 28% of our business would come predominantly from that market from a value standpoint,” he said.

SAP said its global restructuring launched in January will impact between 9,000 and 10,000 positions, higher than the original estimate of 8,000 jobs.

For now, SAP India is aiming on getting talent from tier-2 and 3 cities which includes Baroda, Nagpur, Meerut, Coimbatore, and even places in the Northeast where it is has business. The company does not share an India-specific split of the appointment numbers.

The company has been present in India for 26 years with over 15,000 employees including its research and development (R&D) centre SAP Labs.

SAP expects to increase the cloud growth momentum with its focus on business AI (artificial intelligence). India has a combination of both technology and talent availability, Prasad said.