Samsung SDS, the nation’s largest IT service provider, has decided to jointly set up a “cloud innovation lab” with the world’s largest software company, Microsoft. On top of Samsung SDS, LG CNS and SK E&C, two of the Big Three Korean IC service providers are scrambling to forge cloud alliances and enter the Korean public and private markets. 

Samsung SDS singed an MOU on strategic partnership to raise the competitiveness of cloud services and explore new business models with MS at the latter’s headquarters in Redmond, Washington, the United States, on July 24. 

The deal calls for developing new businesses based on Microsoft’s cloud platforms “Azure” and “Azure Stack” and expanding businesses in Korea. Under the agreement, diverse services related to Azure, including hybrid cloud wed applications will be supplied to subsidiaries of Samsung Group as well as Korean companies. 

At the center of the agreement is the joint establishment of an innovation lab by the two companies. Samsung SDS and Microsoft will conduct technology exchanges and joint research by sharing the former’s capabilities to build solutions and systems and the latter’s technology, data and cloud product roadmaps. 

Samsung SDS President Chung Yoo-sung said, “Our collaboration with the global could company Microsoft will serve as an opportunity to raise the competitiveness of the cloud business and expand the business.” Microsoft Korea President Koh Soon-dong said Microsoft will aggressively cooperate so that more Korean companies can explore new businesses through cloud and make digital transfers.

On July 2, LG CNS forged a strategic partnership with Amazon Web Service (AWS), the world’s largest cloud company. Under the agreement, LG CNS will receive support for cloud strategies and consulting capabilities from AWS. The deal calls for expanding Korean clientele by making the most of LG CNS’s capabilities to set up large-sized IT systems and knowhow on the operation of solutions. 

The two companies have agreed to make joint marketing activities to promote the AWS cloud transfer acceleration program for optimal cloud transfers. 

They also plan to cooperate in the artificial intelligence and big data sectors by utilizing AWS’s Amazon Lex, a system involving natural language understanding technology, and Amazon Recognition, an image analysis solution based on deep learning. In August 2016, SK C&C implemented joint projects with IBM by establishing a data center combining the cloud technologies of the two companies in Pangyo, Gyeonggi-do. 

Korean IT service providers’ forging alliances with global cloud companies is designed to own the expanding Korean cloud market ahead of others. The market survey company Gartner reported that the Korean cloud market is forecast to swell to $6.4 billion (about 4.3 trillion won) by 2020. The figure represents a 64 percent jump over $3.9 billion (about 4.3 trillion won) estimated for this year. 

Korean IT service providers can transfer technology and consulting capabilities from global cloud companies. In return, global companies can attract Korean large-sized companies as their clients. They can make an inroad into not only affiliates of their Korean partners and other large-sized companies. Foreign companies want to tap the private and public markets. The government aims to raise the portion of private-sector cloud in the public sector by 40 percent next year.