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By: John V.

Cloud Computing is a computer concept that is starting to appear in the limelight of outsourcing and IT companies. It is an alternative solution for computer services where one service is shared by many through a collection of servers. This means that instead of installing a program into a single computer unit in the company, the program can be accessed by multiple units via the internet. Now what does that mean? It means savings on licensing original products and cost reduction on IT maintenance, a problem that has become a vital and important issue for chief information officers according to experts.

Software giant Microsoft (NASDAQ:MSFT) sees that cloud computing could have the same potential for India’s IT industry as India was to the U.S. as an outsourced cost efficient alternative. Talk about a twist of fate. Verizon (NYSE:VZ) has recently been recognized as a leader in the magic quadrant for communications outsourcing and professional services worldwide. Their senior VP and chief marketing officer said that they plan to move to a total cloud-based model. India’s government might be the first to use an e-governance system using cloud-based IT services for its citizens which could pave the way for new markets for International Business Machines Corp. (NYSE:IBM), Salesforce.com (NYSE:CRM) and Microsoft, and Indian players such as Tata Consultancy Services [BOM:532540], Infosys (NASDAQ:INFY) and Wipro (NYSE:WIT).

With all the savings that cloud computing could bring, it is not without its upsets. Two segments of the IT industry could seriously be impacted by this trend; the first being the software industry. As a significant part of their business relies on profits from sales of their software, having shared software accessed by multiple users could potentially take a hit on their earnings. Although Microsoft has countered by saying that they have anticipated this and have laid out a strategy as early as 2008. The second segment which could be heavily affected is IT services such as application development, installation and maintenance. If this trend continues to develop, companies specializing in this might see smaller and tighter business opportunities.

Perhaps the biggest concern with cloud computing is data security. A report stated that there has been an increase in cyber crime attacks, thus customers and firms alike have been cautious in going forward with this model. With large server farms being big targets for cyber criminals, concerns for confidentiality and data safety should be addressed with utmost concern. Accenture (NYSE:ACN) has opened a threat analysis center in San Antonio, Texas, in response to address the growing demand for data-centric security.

Cost efficiency is one of the fundamentals to ensuring that you will likely be earning more by cutting out and minimizing expenses. Cloud computing can offer such efficiency. But sensitive information such as accounts and financial information should be secured. So it would boil down to consumer confidence at the end. Developments in security will always be matched with the foul ingeniousness of thieves and hackers, but if you trust that your provider would always be on guard for such attacks, then by all means, go ahead and try this new exciting trend and wait for the savings to come pouring in.

Disclosure: No Position

Source: Cloud Computing Appearing in Outsourcing and IT Services