While every market in the data center industry is different, there is one thing they all have in common: they are growing, and extensively.
India is no exception. According to Arizton research, in 2021, the data center market in India was valued at $4.35 billion and is predicted to reach $10.09 billion by 2027. A significant growth, the question lies in what this growth will look like, and how companies can best use this information to leverage their choices.
One of the key things driving growth lies in Government measures aimed at driving digital infrastructure growth, including the Digital India initiative; classification of data centers as infrastructure assets, and proposing new data localization laws, all of which will drive the data center industry in the country – both cloud and colocation.
Harish Sridharan, practice head, data center and cloud for Arizton Advisory & Intelligence, also raised the pertinent issue of the impact the Covid-19 pandemic had on the Indian data center market in our recent DCD>Inside India broadcast.
“Pre-Covid you would see under construction that capacity was almost 150-200 megawatts on a yearly basis. Post-Covid, you see a lot of new entrants into the market, especially from a global player standpoint, actively planning to build data centers to bring a capacity of almost 500 megawatts. As per our database, it says that there are 25 data center projects that are currently at various stages, which are likely to bring 500 megawatts of capacity into the market.
“What Covid has done to Indian enterprises, in general, is they are having difficulty in accessing their on-premise data centers. Therefore the number of enterprises having digitalization initiatives has spiked a lot. What happened, as a result, is many enterprises in India migrated their infrastructure to the cloud, or they simply opted for managed hosting services in third-party data centers across India.”
This pre and post-pandemic experience has not been limited to the Indian market. The pandemic has created a fundamental shift across the data center industry, affecting the supply chain, workforce, demand, scale, and more.
Vimal Kaw, head of data centers for NTT Global Data Centers, took us even further back than pre-pandemic.
“I will take you back a few years when colocation was not doing that great, in the year 2012. The moment hyperscalers came to the ground, they started fueling the demand.
“We soon understood that the infrastructure is not that great in India. So we had to do some Greenfield data centers. Initially, they also went very slow.
“Now, what has happened because of the Covid situation, including the common policies, the fuel industry, and the enterprise growth as well, in terms of infrastructure we cannot examine a multi-tenant data center building, we cannot differentiate much because we are a colo provider, we provide infrastructure, cooling, and power.
“We don't differentiate in terms of the specifications when it comes to hyperscale and enterprise customers hosting in the same building, but yes, there are different needs from the hyperscale side, because the power consumption is high compared to what the retail customers have.”
There could be a concern surrounding a battle between cloud and colocation, and which will win out. But according to Kaw, the reality is actually quite different. Cloud and colocation can work together, the real threat is companies building on-premise data centers.
“I'm not worried about the competition brewing up in India, but I am worried about them making their own data centers. That's a genuine worry. They have a reason to do that. So let's find out what the reasons are, why do they want to build their own data center?
“The biggest reason is going to be the cost, they're growing in volume and India is providing a huge market to them for setting up their colocation in India.
“The second is that they also want the surety for the quality now, and they also have their proprietary designs which they want to keep to themselves. So, we need to have flexibility – that whatever is not happening in India, whatever is happening abroad, we need to get that technology to India and tell the enterprises that we can deliver it on their behalf.
“The last part is how can we convince them? We can convince them by giving them lower costs, making what they want, and assuring them of the quality. At the same time, the speed of construction, and the spirit of construction in the Indian market are going to be big game changers. That will help us persuade them that they should go ahead and start getting supreme colocation from the colocation providers, and not make their own data centers.
“Cloud is the biggest customer for colocation. As they grow, the colocation space will grow, we just have to keep persuading them that they should not build their own data centers.
“For us, cloud versus colocation, I don't think that's going to be a debate. As the cloud grows, colocation will grow.”
The future of the Indian data center market looks bright, if not entirely figured out as yet. A lot will depend on persuading companies to use cloud and colocation instead of building their own data centers, while in a market that offers a lot of incentive to do just that.