Public cloud spending will near $500B by 2023: report

Driven by software-as-a-service (SaaS) and infrastructure-as-a-service (IaaS), worldwide public cloud spending is poised to more than double by 2023.

A report by International Data Services (IDC) said public cloud spending will grow from $229 billion in 2019 to nearly $500 billion by 2023, which is good news for telecommunications companies and hyperscale cloud providers. The compound annual growth rate (CAGR) for public cloud spending is projected to be 23%, according to IDC.

"Adoption of public (shared) cloud services continues to grow rapidly as enterprises, especially in professional services, telecommunications, and retail, continue to shift from traditional application software to software-as-a-service and from traditional infrastructure to infrastructure-as-a-service to empower customer experience and operational-led digital transformation (DX) initiatives," said Eileen Smith, program director, Customer Insights and Analysis, in a prepared statement.

Enterprises are making the move to SaaS services, such as Office 365 or Salesforce, in order to put their storage, data and workloads in the cloud. According to IDC, SaaS will be the largest category of cloud computing by accounting for more than half of all public cloud spending throughout the five-year forecast period. The top SaaS applications going forward will be customer relationship management and enterprise resource management, according to IDC.

IaaS is ranked second for public cloud spending followed by platform-as-a-service (PaaS) spending. IaaS spending, which includes servers and storage devices, will be the fasted growing sector of cloud spending with a five-year CAGR of 32%, while PaaS has a CAGR of 30% over the same timeframe. PaaS includes purchases of data management software, applications platforms, and integration and orchestration of middleware.

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While SaaS is slated to be the leading category of investment for all industries, IaaS will see its share of spending increase across the industry verticals that are building data and compute intensive services. IaaS spending will represent more than 40% of public cloud services spending by the professional services industry in 2023 compared to less than 30% for most other industries. Professional services will also see the fastest growth in public cloud spending with a five-year CAGR of 25%.

IDC's Worldwide Semiannual Public Cloud Services Spending Guide said that professional services, discrete manufacturing and banking would account for more than one third of all public cloud services spending throughout the forecast.

On a global basis, the U.S. will be the largest public cloud services market, accounting for more than half the worldwide total through 2023, while Western Europe will be the second largest market with nearly 20% of the total. China will experience the fastest growth in public cloud services spending over the forecast period with a 49% CAGR. Latin America is also expected to deliver solid public cloud spending growth with a 38% CAGR.