As technology transforms every aspect of our lives, startups are increasingly being built as cloud-native platforms. This puts players like Amazon Web Services (AWS), one of the largest cloud service providers in India, at a critical juncture.
In a conversation with Moneycontrol, Navdeep Manaktala, director of startup business for Asia Pacific and Japan (APJ) at AWS, shares his views on how the Indian tech ecosystem is evolving rapidly and where his company is placed.
While Amazon is upbeat around the fintech space and is bringing in as many services as possible for startups in these sectors, it is the overall switch to cloud across business segments which is throwing open massive business opportunities in India, he said. Further, India has the largest cloud infrastructure for Amazon outside the United States, which shows their commitment to this market.
The Indian startup ecosystem is going through a boom phase. What is your outlook on the sector?
Manaktala: We are seeing startup activity happening beyond Bengaluru. Places like Delhi NCR, Mumbai, Pune, Hyderabad, Chennai are all seeing a number of emerging companies. We are also seeing activity picking up in smaller towns like Jaipur and Coimbatore. Different locations are picking up for different types of companies.
These are good signs for the overall health of the startups. We are also seeing serial entrepreneurs building successive ventures. Even CXOs from established startups are coming out and starting new ventures. From our business standpoint, we see B2B startups emerging at a faster pace now, while ecommerce and other consumer-focussed businesses were at the forefront in the first wave.
Among various sectors, which are the ones most exciting for AWS?
Manaktala: With respect to fintechs, India is at the forefront of this revolution globally. With regards to APJ, of the 4,500 fintechs, India alone has about 2,800. In 2019, $5.1 billion was poured into the fintech sector across APJ. Out of this, close to $2.6 billion came to India.
Over the last five years, India alone has got institutional investments worth around $10 billion in this space through around 600 deals, across payments, capital markets, lending, neo banking, blockchain, insuretech etc.
For us, fintech is therefore at the top, followed by edutech, workforce collaboration players, like Slack, and gaming.
How is your India business growing?
Manaktala: We’re seeing traction for cloud across enterprises, startups, small and medium businesses, and ISVs (independent software vendors). For people who are using on-premise infrastructure, it's about when and what goes first in terms of the movement to the cloud.
I think what COVID-19 has also done is it has kind of accelerated that digital transformation story. Every single customer conversation that we're having today involves a discussion around Machine Learning and analytics, which wasn't the case about even a year ago.
We have 18 Edge Locations (Points of Presence), including one in Kolkata, which we added earlier in 2020. That is the largest number of Edge Locations AWS has in any country outside the US.
India has the largest number of AWS Direct Connect locations in a country outside the US. We have functional teams -- right from customer account teams, technical teams and support teams in India. We have a global support centre out of India. All this shows the amount of investments we are making in the country.
From the days of discussions around when to move to cloud, if at all, now startups are being built cloud-native. How did this change take place?
Manaktala: Entrepreneurs are aware of the the advantages of building off us. Cloud gives one the agility to spin up as many resources as needed, like thousands of servers can be put up in a matter of a few minutes. What is important here is that the cost of failure is pretty low in this space.
Then you are paying as you go. In some cases, charges go down to a few milliseconds as well for micro services. Cloud also gives you elasticity. You do not need to buy servers for your peak load, you can scale up during the few days of peak load and reduce capacity in the other days. Then, they have the option of scaling up globally with us. We have 24 geographic regions. All these players like Druva, Freshworks, Manthan have been built off us.
While you might be bullish on the fintech sector, doesn’t regulations make it difficult to build fintech startups off the cloud?
Manaktala: Fintech startups need to be conversant in regulations. That is something Amazon Web Services brings to the table. We have specialist teams for all these services.
We have teams with policy experts who understand regulations, and speciality security architects who specialise on compliance. We have public guides to what companies need to do to adhere to banking regulations, insurance regulations, so on and so forth. We also share best practices with our customers, and help them adhere to audit requirements. The minute you build off us, you inherit all the international accreditations and certifications that we have acquired. We have more than 200 security compliance and governance services which we offer.
Large fintechs like Transferwise, Coinbase and Stripe are built off us. In case of India, startups in capital markets like Zerodha, Upstox, insurance players like PolicyBazaar, Coverfox, lending startups like BankBazaar, Lendingkart, Karza, crypto trading platforms Unocoin, Zebpay all are built off us.
Post the data localisation guidelines for payment companies, many entrepreneurs told me that they store data in Amazon servers in India. How has the move helped Amazon in its business here?
Manaktala: Our customers decide the region. If it’s Mumbai, their data will be set up and stored in the Mumbai region. There are three Availability Zones in Mumbai AWS region -- that’s three logical data centres together.
Customers, in our case, have always had that choice from day one. If any business is catering to customers outside the country, and is subject to any data localisation requirements there, they can set up business in that part. We made that investment early, well before that regulation came into place.
How do you look at the competition landscape in India? Microsoft Azure is a major competitor in the cloud services space…
Manaktala: There are three important things about AWS. One is that we are unusually customer-focussed, and 90 percent of what we build is driven by what customers tell us and that helps us decide our roadmap. Once we get the feedback from users, we have very empowered teams who are delegated and authorised to work with customers, quickly build out things and launch them, and evolve them too.
The third is our pricing. We have different types of pricing. We also offer different options to our customers where they can get anywhere between 60 to 90 percent discounts on prices. We work towards cost optimisation. We will actively go out and tell customers that this is the excess amount they are spending on us.
OTT services and video-streaming are seeing massive adoption in India. How is AWS placed to support this growth?
Manaktala: We have a CDN service (Content Distribution Network) of our own. This accelerates content distribution. Then, we have our edge locations and caching at the edge location. A CDN is typically used to accelerate content delivery or video for cases like gaming. We have a bunch of services that are used by customers across the OTT space today. Almost all of the OTT platforms in the country are built off AWS, whether it’s SonyLiv, Zee5, Hotstar, or Airtel Wynk.