AWS Alternatives for ISVs: Cut Cloud Infrastructure Costs

For an independent software vendor, cloud spend is not an IT expense. It is cost of goods sold, and it sits directly on your gross margin. That is why the search for the best alternative for AWS has moved from a developer-side conversation into board meetings. The question is no longer whether hyperscalers are good infrastructure. They are. The question is whether a mature ISV with predictable workloads should keep paying a premium built for unpredictable ones.

The honest answer is that most ISVs should move some workloads and keep others. This article covers which are which, what the numbers actually say, and what the move costs you before it saves you anything.

The Margin Problem Nobody Priced In

Andreessen Horowitz put the argument on the record in 2021 with an analysis of 50 public software companies. Their finding was that cloud spend was suppressing an estimated $100 billion of market value across that group alone, because infrastructure costs sitting in cost of revenue drag down gross margin, and gross margin drives valuation multiples. They calculated an average enterprise value to gross profit multiple of 24 to 25 times, meaning every dollar of infrastructure cost removed from COGS is worth many times that in market capitalisation.

That analysis has critics, and they make a fair point. Corey Quinn of Last Week in AWS has argued that the link between margin improvement and share price is far less mechanical than the model assumes, and that repatriation savings estimates are often optimistic. Both things can be true. The valuation multiplier may be theoretical, but the cash savings are not.

For a bootstrapped or growth-stage ISV that is not thinking about public market multiples at all, the argument is simpler still. Infrastructure is the second largest line item after salaries for most SaaS businesses. A 40% reduction in that line is either runway or hiring.

What Actually Drives an ISV Hyperscaler Bill

Compute is rarely the surprise. The surprise is everything wrapped around it. These are the line items that show up in almost every ISV bill review.

Egress, the charge that scales with your success

Data going into a hyperscaler is free. Data leaving is not. AWS publishes tiered internet egress pricing at $0.09 per GB for the first 10 TB each month after a 100 GB free allowance, dropping to $0.085 per GB for the next 40 TB, $0.07 per GB for the next 100 TB, and $0.05 per GB above 150 TB, with the standard US and Europe rates verified against AWS pricing pages in 2026. Regional rates run higher, with Asia Pacific Singapore starting at $0.12 per GB. Azure sits at a comparable $0.087 per GB entry tier.

For an ISV serving reports, exports, media, API responses, or backups to customers, egress is not overhead. It is a tax that grows in direct proportion to how much your customers use your product. That is a strange thing to have in your cost structure.

The internal traffic you did not know was metered

Cross-availability-zone traffic is billed at roughly $0.01 per GB in each direction on AWS, and NAT Gateway processing adds around $0.045 per GB on top of an hourly charge. A microservices architecture spread across zones can generate enormous volumes of traffic that never leaves the provider network and is billed anyway. Analyses of distributed architectures put data transfer at up to 30 to 40% of total spend in the worst cases, which is not a number most founders expect.

The managed service premium

Managed database, cache, and search services are excellent products, and you pay for the convenience. When 37signals moved off AWS, they replaced RDS with MySQL on bare metal, ElastiCache with Redis on local NVMe, and Elasticsearch Service with self-hosted Elasticsearch. The engineering was not trivial, but the substitution was possible because those are open source products underneath.

Waste you are paying for right now

Flexera’s 2026 State of the Cloud Report, based on a survey of 753 cloud decision-makers and users, found that 85% of organisations consider managing cloud spend a top challenge, while 17% reported exceeding their public-cloud budgets. More concerningly, an estimated 29% of IaaS and PaaS cloud spend is being wasted, reversing a five-year downward trend. Flexera attributes the increase partly to the growing cost complexity of AI workloads and the proliferation of newer cloud services and pricing models. Before evaluating any alternative, understand what that number means for your own infrastructure: nearly three out of every ten dollars spent on IaaS and PaaS may not be delivering meaningful value.

What the Repatriation Data Really Says

The headline statistic in circulation is that 86% of CIOs planned to move some public cloud workloads back to private cloud or on-premises infrastructure, the highest figure recorded in the Barclays CIO Survey. It is a real number, and it is routinely misread as an exodus. Anyone evaluating AWS alternatives in India should understand what it does and does not mean.

IDC research indicates that organisations are increasingly taking a selective approach to cloud repatriation rather than abandoning public cloud altogether. That aligns with Gartner’s 2026 outlook: worldwide IaaS spending is forecast to reach approximately $287 billion, growing 29.3% year over year, while AI-optimized IaaS spending is projected to reach $42.3 billion, up 96.4% from 2025. The message is clear: cloud adoption is not reversing; it is becoming more deliberate. Organisations are moving workloads between public cloud, private infrastructure and hybrid environments based on cost, performance, compliance and workload characteristics. The market is expanding while the architecture is becoming more selective.

The practical reading for an ISV is that this is a workload-level decision, not a company-level one. Anyone selling you a total migration is overselling, and anyone telling you the trend is imaginary has not looked at a mature SaaS bill recently.

The case study everyone cites, with the numbers checked

37signals, the company behind Basecamp and HEY, is the most documented example. Their reported 2022 cloud spend was $3.2 million annually. They purchased roughly $700,000 of Dell hardware, moved seven applications off AWS, and reported cloud costs falling by close to $2 million a year, with the hardware cost recouped as commitments expired. In 2025, they moved storage off S3 to on-premises Pure Storage arrays, retiring a reported S3 bill of around $1.5 million annually, with AWS waiving $250,000 in egress fees to let the data out. CTO David Heinemeier Hansson has put combined projected savings at over $10 million across five years.

Two caveats worth stating to any client who raises this case. First, 37signals had unusually stable and predictable workloads, which is exactly the profile where the economics work. Second, they went to colocated hardware they own and operate, which is a bigger operational commitment than most ISVs want. Moving to a leaner cloud provider is the middle path, and for most software vendors it is the more realistic one.

Why ISVs Feel This More Sharply Than Anyone Else

An enterprise running internal applications treats cloud cost as opex. An ISV embeds it in a product that is sold at a fixed subscription price. The difference in consequence is significant.

Cost per tenant is your unit economics.

Every new customer adds infrastructure cost. If your infrastructure cost per tenant does not fall as you scale, you have built a business that gets harder rather than easier.

Your customers now ask where the data lives.

Indian enterprise and public sector buyers increasingly raise data location in procurement, and the answer affects whether you clear security review. This is one reason AWS alternatives in India get shortlisted on compliance grounds before anyone has looked at the pricing.

You may be funding a competitor.

Hyperscalers ship first-party services that overlap with independent software categories. Plenty of ISVs are uncomfortable that their infrastructure spend funds a platform that could ship a competing feature.

Predictable workloads pay for unpredictability.

Elastic pricing is worth a premium when your load is genuinely spiky. A mature multi-tenant SaaS platform with a known daily curve is buying insurance it does not claim on.

What to Move and What to Leave Alone

The discipline here is per workload, not per company. Evaluating AWS alternative cloud hosting starts with sorting your estate into two lists honestly.

Strong candidates to move

Steady-state application servers with a predictable daily load curve.
Databases with stable working sets that do not need burst capacity.
Egress-heavy services such as file delivery, media, reporting, and data export.
Development, staging, CI, and QA environments, which are usually the easiest first move and lowest risk.
Long-term storage and backup archives where retrieval patterns are known.
Anything serving primarily Indian users from a distant region, where latency and cost both improve.

Usually worth keeping where they are

Genuinely unpredictable, spiky workloads where elasticity earns its premium.
Deep first-party service dependencies that would require significant rewriting.
Global edge delivery where a hyperscaler CDN footprint is hard to replicate.
Specialised AI and GPU workloads, subject to what your alternative provider actually offers.
Anything a signed customer contract explicitly requires to run on a named platform.

A hybrid outcome is a legitimate outcome. Many ISVs evaluating an Azure alternative for their core platform keep specific services where they are and move the predictable majority elsewhere. That is not indecision. It is the correct answer to a question with different answers per workload.

Sort your estate this way and the shape of the decision usually becomes obvious within an afternoon. The best alternative for AWS in your specific case is whichever provider serves the first list well at a materially lower total cost, while you leave the second list where it already works. An Azure alternative evaluated on the same basis will produce a similar split, because the underlying economics of predictable versus bursty workloads do not change with the logo on the invoice.

How to Evaluate a Provider Properly

Rate cards are the easiest to compare and the least useful. Assessing AWS’s biggest competitors in India means modelling total cost against your own workload profile, then testing their operational claims.

Model egress before you model compute

For most ISVs, this is where the difference lives. Take your actual monthly outbound transfer and price it under both rate cards. Neon Cloud includes a data transfer allowance with every plan, ranging from 1 TB on entry B-series instances up to 15 TB on the largest, with transfer beyond the plan limit charged separately. Note that Neon’s pricing table and its pricing page footnote quote slightly different beyond-plan rates, so confirm the current figure directly before building it into a model.

Price the whole stack, not the instance

Neon Cloud publishes a Kubernetes control plane at no charge, with billing only for worker nodes and associated resources, starting at ₹422 per month for a K1.nano. Virtual private cloud and cloud firewalls are listed as included at no cost, load balancers at a flat ₹500, NVMe block storage from ₹3 per GB, S3-compatible object storage with built-in CDN at ₹600 flat up to 250 GB and ₹2.5 per GB beyond, VM backups at ₹2 per GB and snapshots at ₹5.75 per GB or ₹0.008 per GB per hour. Compare against your equivalent line items rather than against a headline instance price.

Test the exit before you commit to the entry

Ask any provider directly how you leave. Neon Cloud states that it operates without long-term commitments, which addresses contractual lock-in. Technical portability is a separate question worth asking of every vendor, because proprietary APIs and managed service integrations create switching costs even where contracts do not. Standard tooling helps here, and Neon Cloud lists MySQL, PostgreSQL, MariaDB, MongoDB, Redis, Percona, and Couchbase as available add-ons alongside custom ISO upload.

Check who you are actually buying from

Neon Cloud is a brand of Progression Infonet, which states more than 30 years in IT and a track record of hosting 90 or more SAP customers. For an ISV whose own customers will ask about their vendor’s vendor, operating history is a due diligence answer, not a marketing line. Neon Cloud also runs a dedicated ISV programme with consumption-based billing aimed at partner margin, and publishes an SLA and escalation matrix worth reading in full rather than taking the homepage uptime figure at face value.

Understand what you gain and lose on breadth

This is the trade to state plainly. Hyperscalers offer hundreds of services, global region coverage and enormous ecosystems. A leaner provider offers a smaller catalogue at lower cost with local support. If your architecture depends on ten first-party managed services, the migration cost may exceed the saving. If it runs on Linux, a database, a cache, and object storage, it probably will not.

Worth saying clearly, because vendor content rarely does. Among the AWS biggest competitors in India, none matches hyperscaler service breadth, and any provider claiming otherwise is not being straight with you. What a leaner platform competes on is price per unit, transfer terms, data location, and whether a human answers when something breaks. Decide which of those you are actually buying.

The Costs of Moving That Nobody Puts in the Business Case

Any migration proposal that shows only the savings is incomplete. Budget for these before you sign anything.

Exit egress. Getting your data out is billed at the provider’s standard rates unless negotiated, and at petabyte scale that is a material one-time cost.
Engineering time. Replacing managed services with self-managed equivalents is real work that competes with your product roadmap.
Parallel running. You will pay both bills during transition, often for months.
Committed spend already purchased. Reserved instances and savings plans do not refund because you changed your mind.
Operational maturity. Monitoring, patching, backup verification and incident response become more your responsibility.
Customer communication. Enterprise contracts may require notification, and some require approval.

The reason 37signals recovered their hardware cost within a year is that their savings were large enough to absorb all of this. Run your own numbers rather than theirs.

None of this argues against moving. It argues for a payback period calculated honestly. If AWS alternative cloud hosting pays for its own migration within twelve to eighteen months on your real numbers, the case is strong. If the payback runs past three years, the saving is probably not worth the engineering distraction, and optimising what you already run will return more for less risk.

A Sensible Sequence for Getting This Right

Instrument your current bill by service and by workload, not just by total.
Separate the waste from the spend. Cut idle and over-provisioned resources first, because that saving needs no migration at all.
Model your top three workloads under an alternative rate card, including egress and storage.
Move development and staging first. Low risk, real data, no customer exposure.
Run a single production workload in parallel and measure latency, throughput and support responsiveness.
Decide per workload with the numbers in front of you, and write down what would make you reverse the decision.

Decide Per Workload, Not Per Headline

The repatriation conversation has generated more heat than clarity. The evidence supports selective relocation rather than mass exit, and the ISVs getting real results are the ones treating infrastructure as a margin decision with a spreadsheet behind it. Finding the best alternative for AWS means finding the best fit for your specific workloads, which for most software vendors will be a hybrid answer rather than a clean break.

Neon Cloud offers Indian ISVs virtual machines, a free Kubernetes control plane, load balancers, block and object storage with built-in CDN, backups and snapshots from data centres in Delhi NCR and Mumbai, with included data transfer allowances, no long-term commitments, a published SLA and free migration support from AWS, GCP, and Azure through its white-glove onboarding programme.

Frequently Asked Questions

What is the best alternative for AWS if an ISV wants to cut infrastructure costs?

There is no single answer, because it depends on your workload profile. The best alternative for AWS is usually a provider whose egress, storage, and compute pricing suits your actual usage shape, with standard open-source tooling that keeps future migration possible.

Are AWS alternatives in India viable for production SaaS workloads?

Yes, for most standard architectures. AWS alternatives in India can serve production SaaS reliably where the provider offers a published SLA, in-country data centres, and predictable transfer pricing. Verify latency, redundancy configuration, and support responsiveness during a trial before migrating anything.

How much can AWS alternative cloud hosting realistically save an ISV?

Savings vary widely by workload. Reported figures range from modest to substantial, with 37signals cutting roughly $2 million annually. AWS alternative cloud hosting saves most on predictable compute and egress-heavy workloads, and least on spiky or deeply managed-service-dependent architectures.

Who are the AWS biggest competitors in India for ISV workloads?

Azure and Google Cloud compete directly, alongside domestic IaaS providers offering local data residency and lower transfer pricing. The AWS biggest competitors in India for ISV workloads differ by requirement, so shortlist based on data location, egress terms, SLA coverage, and support model.

When should an ISV consider an Azure alternative instead of optimising current spend?

Optimise first. Flexera research indicates around 27% of cloud spend is wasted, so cut idle resources before migrating. Consider an Azure alternative once your workloads are predictable, right-sized, and the remaining cost still exceeds comparable pricing elsewhere.

Why ISVs Are Moving Off Hyperscalers to Cut Infrastructure Costs