Market Intelligence
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United Kingdom Cloud Services Market

Market Overview

  • Over 100,000 software companies in market   
  • Second largest ICT markets in ranking of ICT spending per head (U.S. #1)   
  • London second most connected place for tech, right after Silicon Valley   
  • No. 1 top scaling tech nation in Europe   
  • No. 1 destination for U.S. ICT businesses in Europe (often serving as EMEA HQ)    
  • UK tech VC investment is third in the world (after U.S and China), and more than any other European country (more than France and Germany combined) , hitting a record high of $21bn in 2020 in the face of challenging conditions. 

Cloud computing offers significant growth opportunities: almost all software companies in the UK are using cloud and opportunities exist in both the public and private sectors for companies offering cloud or linked services.  

Revenue in the United Kingdom (UK) from public cloud services, which makes up most of the cloud computing market, amounted to around $12bn in 2020. Amazon Web Services (AWS), Microsoft Azure and Google Cloud are the key players, with AWS being the market leader for cloud infrastructure services.  

Demand for public cloud services has accelerate growth in the UK IT sector, even after recent declines due to the COVID-19 pandemic: while some IT demand has declined this year, especially in the area of traditional managed services, demand for public cloud services is growing. Large UK enterprises are moving to the cloud faster than their smaller counterparts, but even small and medium-sized companies are showing increasing interest in infrastructure-as-a-service offerings. Indeed UK businesses are steadily adopting a cloud-first approach, and a growing number of companies can foresee a time when they will move a large majority of their IT to the cloud. 

Growing demand for public cloud services in the UK have been supported by the ongoing shift to remote working due to the pandemic. Companies in the UK are looking to cloud services to help them automate work and business processes that are needed in remote-work scenarios. 

Enterprises also are seeing the power of cloud services and solutions to address consumer needs. Many enterprises in the UK are focused on a multi-cloud strategy and on building cloud-native solutions. They are seeking service providers that can deliver the most value for their IT investment and want the ability to move their data and avoid vendor lock-in. UK enterprises frequently want to use more than one vendor because each one has particular strengths related to vertical solutions, pricing and other factors. However this might create additional complexity and as a result many customers are turning to service providers to help them manage multi-cloud environments. 

Still, some large enterprises haven’t been able to fully eliminate their depreciated hardware assets and move completely to the cloud. Many enterprises continue to operate in hybrid cloud and on-premises IT environments. 

The UK government has also been strongly supporting the adoption of cloud technologies. The UK Government G-Cloud program is changing the way public sector organizations purchase information and communications technology. The G-Cloud Framework enables public bodies to procure commodity-based, pay-as-you-go cloud services on government-approved, short-term contracts through an online catalogue called the Digital Marketplace. This streamlined procurement process supports the UK government’s “Cloud First” policy and is a key component in the government’s ambition to operate a “cloud native” digital architecture. 

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