Microsoft snatches Ola from Amazon Web Services, plans cloud biz expansion

Ride-hailing service Ola and US technology giant Microsoft are understood to be taking their partnership to the next level with the Indian company migrating its entire technology stack from Amazon Web Services (AWS) to Microsoft’s Azure cloud platform.

The deal will help Ola save as much as 30-40 per cent on its bill for cloud computing services, which stands at around $20 million (Rs 1.4 billion), a source said. 

This comes at a time when Ola is cutting expenses as it looks to become profitable by the end of the year or early next year. 

Microsoft, on the other hand, will win yet another multi-million dollar customer. In November, the firms had struck a deal for Ola's connected car platform. 

Talks between the two progressed from there leading to Azure becoming Ola’s preferred cloud provider for its entire stack, the source said.

Microsoft has struck similar deals with Flipkart, India’s largest e-commerce marketplace, and with digital ads network InMobi. In the case of Flipkart, Microsoft followed up by participating in a $1.4-billion investment in the firm along with investors Tencent and eBay in April last year.

While there is no word on whether the partnership will translate into Microsoft making an investment in Ola, some of the early investors in the Indian firm are looking for a suitable exit. Sources close to the company say that Singapore’s sovereign wealth fund Temasek is in talks with the company to make an investment through secondary route.

While Ola declined to comment, an email sent to Microsoft did not elicit any response. An AWS spokesperson said: “While the vast majority of AWS customers choose to work with one infrastructure provider for the many benefits that delivers, some customers choose to run part of their workloads with a second provider, to expand their experience, and for comparison purposes.” 

Industry watchers point out that Microsoft is looking at partnerships with India’s large new-age technology companies as a way to grow its cloud business. The Redmond-headquartered firm is even willing to pick up stakes in these firms to ensure that it builds long-lasting relationships.

India’s market for cloud computing is estimated to be worth $2 billion already, and is expected to double in the next two to three years. 

While AWS continues to lead the market, Microsoft, Google, Alibaba and even Tencent are making massive investments to grab a piece of the market. Each of these players have made massive investments in setting up data centres to cater to local customers, with India tightening its laws on data localisation and privacy.

Sudarshan P N, Partner at Deloitte, said: “Adoption of cloud was initially propelled by technology need in the mid-market and government-related services, but now we see that large institutions are also taking it up. However, despite the pickup in number of larger deals in this space, I believe that the demand from mid-market will continue to drive the growth.”