With the world rapidly digitalising, cloud-based startups have had a tremendous opportunity to flourish. With more companies moving from traditional in-house IT solutions to outsourcing things such as servers, databases and hosting, cloud computing has become crucial, with around 85% of businesses expected to utilise cloud services by 2025. This increase is a massive u-turn from 2019 when the more traditional, on-premise servers were the norm for over 60% of companies.
Various factors present Singapore as cloud hub favourite for the ASEAN region. The Massachusetts Institute of Technology (MIT) recently ranked Singapore as the number one country for cloud development and innovation in its first-ever Global Cloud Ecosystem Index. Southeast Asia’s “Silicon Valley” was followed by Finland, Sweden, Denmark, and Switzerland, completing the top five out of 76 nations assessed. The fact that the cloud startups Singapore is home to innovate at such a level as to top this list is a good indicator of the sector’s strength in the country.
Why Singapore?
Already one of the world’s most technologically advanced countries, Singapore always strives to follow tech trends and innovate. Cloud computing is one of the most significant growth sectors, making it a smart investment choice for both government and private investors.
According to market.us, The global cloud computing market was valued at USD 522 billion in 2022. It is expected to reach USD 2,972.6 billion at a CAGR of 19% between 2022 to 2032.
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Through the Smart Nation initiative, the government encourages innovation and has shown its commitment to cloud-based services by moving most of its services to commercial cloud platforms. The move from in-house storage began with the Government on Commercial Cloud (GCC) setting up in 2019. This vote of confidence in the country’s cloud startups has enhanced the industry’s reputation, and with low corporate tax rates of 17% and the second fastest internet in the world, the city-state has set a precedent for other countries to follow.
The rise of data centres and cloud
The USA may lead the way in the total number of cloud startups, but Singapore ranks high regarding the number per population. Currently, there are approximately 2065 American cloud computing companies; however, with a population of almost 330 million, the sector is tiny compared to Singapore’s 33 startups per 5.7 million people, ranking 4th globally in the startup-to-population ratio.
The scale of growth in Singapore’s cloud computing sector places it in the number one position in Asia, affirming that the country’s investment in the industry is paying off. Since 2017, investments in the sector have continued to rise, with data centres receiving the bulk of the funding. Estimates show that USD 200 million have already found their way into the coffers of Singapore’s cloud-based startups. This investment trend is likely to continue, with predictions showing a growth rate of 5.01% (CAGR) between 2022 and 2027.
As one of the region’s biggest data centre markets, Singapore can attribute much of its growth to the investment in 5G technology, high levels of digitalisation and a nation open to embracing tech innovations. In 2022, the government lifted a three-year moratorium on developing data centres, opening the door for further investment. The sustainable development of such centres, with the support of the Singaporean government, will see the cloud computing landscape growing again, but in a more controlled, minimum-impact way. With space at a premium on the tiny island, ensuring that data centres are built within contained footprints and using renewable energy resources is vital for the country’s future development.
Big players and local startups
All three of the world’s leading cloud computing companies, Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform, have data centres in Singapore. The AWS centre opened in 2010, making it the first in APAC and the second to be built outside the USA, giving the country a long and credible history with the technology.
Meanwhile, Microsoft Azure is partnering with Home Team Science and Technology Agency (HTX) to build the infrastructure for Singapore’s first sovereign cloud to protect the country’s data while innovating and moving services to faster, more scalable, integrated platforms. Google is also working with companies in Singapore to use data and AI responsibly through its cloud platform, demonstrating that the big global players are willing to invest time, money and resources in the country.
On the local front, some of the cloud startups Singapore is developing are proving very successful. Companies such as CloudMile offer solutions for migrating IT services to the cloud, receiving a USD 14 million investment in February 2022 to continue developing its services. Another of Singapore’s big cloud-based startups, Accrets International, provides secure hosting and cloud management to companies worldwide and holds offices in India and China.
With so much in its favour, the future of Singapore as cloud hub for the region and one of the biggest cloud computing markets in the world is almost a foregone conclusion.