In India, the world’s largest democracy, new digital solutions provide endless opportunities for citizens, businesses and markets to evolve as a destination for digital innovation providing end-to-end solutions and to emerge as an ultimate digital partner to enterprises across the globe. Data centres are at the heart of this digital transformation and cloud computing technology, as organizations are now firmly leveraging multi-cloud, hybrid architectures to bring solutions closer to the user in the data-driven market.
Datacenters in India mainly operate as Captive or Outsourced. Captive data centres hold nearly 60% share of the market for conventional features of the single tenancy and data encryption, on the premises operations and management. However shift in value proposition and integration of digital services in BFSI, media and entertainment, telecom and retail are leading to exponential growth in data and storage needs, consequently tipping the scale in favour of third-party hosting. Third-party hosting services of managed or outsourced, collocated and public cloud computing data centres are projected to surge up to 50% in market penetration by 2020.
Mumbai, followed by Bengaluru, NCR and Hyderabad are witnessing growth in a number of data centre operators. Mumbai, Cochin, as well as Chennai, are preferred co-location data centres as they offer cost arbitrage of being connected to submarine cables going through the Middle East, Europe and Southeast Asia.
Factors Impacting Growth of Datacenters in India
Growth of Internet & Smartphones – India is the fastest growing online market with an ever-growing Internet and smartphone population, projected to grow to 850 million and 442 million respectively by 2022. 80% of all the internet traffic in India is driven through mobile phones especially in tier II and tier III cities and town, which is also contributed to phenomenal growth in Indian e-commerce market service through apps or mobile-friendly websites hosted on cloud and datacenter services.
Government Initiatives – Government has launched several initiatives like Digital India, Make in India, Start-up India, Skill India, Innovation Fund to promote a digital economy and GI Cloud Meghraj to harness cloud computing benefits to speed up the development and deployment of eGovernance applications and incentivize private set-ups or private-public partnerships in the sector.
Online governance mechanisms such as GST, Aadhaar Direct Benefits Transfer, MyGov, Goods and Services Tax’s e-way Bill, etc. and urban renewal and retrofitting program of ‘Smart Cities Mission, to create 100 IoT-enabled smart cities have contributed to the need for national information storage centres and State Data Centers.
The draft Personal Data Protection Bill 2018 proposes a legal framework to protect the autonomy and privacy of personal information and mandates data fiduciaries to maintain data localization and protection of consumer data. International credit card companies like Visa, Mastercard, Messaging apps like Whatsapp, or e-commerce companies like Amazon, etc., payments and wallet services are required to mirror data servers on Indian soil entailing overseas CSP’s to collaborate with Indian datacenters.
India allows 100% foreign direct investment (FDI) in IT services and related verticals like data processing, software development and supply services, giving a major boost to the IT-BPM sectors that increasingly opt for data centre solutions from third party providers for cost-effectiveness and organizational efficiency.
Digital Payments and Interoperability – Demonetization and discounts on mobile wallets and rising interoperability through UPI (Unified Payments Interface) have contributed to the growth of digital payment services like Google pay, Phone Pe, etc. and digital wallets like Paytm, Yono, etc. which are primarily cloud-based applications.
Data Localization Impact – Data localization and edge computing have accelerated the trend of IT services, international hyper-scale cloud and online content players invest in data centre infrastructure in India to cater rapidly to the growing local enterprise end-user base. However, many International CSP’s favours collaborating with existing Cloud Service Providers (CSP) in India rather than investing in the set-up. An example is Digital Ocean tie-up with Netmagic solutions.
Robust Infrastructure and Shrinking Cost of Hosting Operations –
Another significant driving force behind the growth of the data centre industry is the availability and decreasing costs of operating infrastructure like
• The availability of abundant real estate reinforced by sustainable land regulations
• Decreasing the cost of electricity and cheaper bandwidth to address the cost of scalability
• Operational factors like reliable power and investments in fibre optic internet cables for high-speed internet connectivity
• Special Economic Zones (SEZs) and Software Technology Parks (STPs) to provide businesses with various tax and non-tax incentives
• Abundant availability of renewable energy by using Solar panels that add to sustainable redundancy measures
Upcoming Investments and Datacenter Projects in India
India’s data centre capacity increased from 1.3 million square feet in 2007 to 10.9 million square feet by the end of 2018 and expected to touch 30 million square feet in 2025 and 90% of infrastructure and capacity is likely to be deployed in Hyperscale ( 5000 servers and 10000 Sq ft) datacenters designed to optimize resources. Here are some notable upcoming projects.
• Colt Data Centre Services (DCS) is looking to develop a 100 MW IT Hyperscale data centre facility in Mumbai
• CtrlS is investing in the world’s largest tier-4 data centre in Mumbai, followed by another facility in Hyderabad and Chennai with a total investment of 2000 crores.
• Oracle is set to launch its first Indian data centre in Mumbai by the end of 2019
• Linode, the world’s largest open cloud provider, has localized cloud operations in Mumbai and is set to scale up the investments in future
• The National Informatics Center(NIC), technology backbone of GOI, has launched the fourth data center in Bhubaneshwar after Delhi, Hyderabad and Pune and setting up country’s biggest data center in Bhopal with a hosting capacity of 0.5 million virtual servers.
• Mumbai-based real estate developer Hiranandani is looking to set-up hyper-density, hyper-scalable data centers in Mumbai, Panvel and Chennai with an investment of ₹15,000 crore. Hiranandani has already built two datacenters for Netmagic Solutions (NTT Group)
• A conglomerate of Adani group is also expected to invest ₹70,000 crore over a decade for developing data centers and has already invested for facilities in Andhra Pradesh.
• Office-space solutions provider Ascendas-Singbridge is investing in data centers in Chennai, Mumbai and Hyderabad to cater to Hyperscale cloud providers like Amazon, Alibaba and Microsoft, etc
• China’s Byte-dance, parent of popular app Tik-Tok, is planning to migrate data of Indian users from US-based locations by setting-up data centers in India.
The major concerns for the data centres in India are shrinking IT budgets and potential downside to solutions that are designed to interconnect the data centres.
• Distance constraints and hardware induced latency, which can be minimized by fibre optics
• Large data capacity limitations, which can be improved through higher transmission rates.
• Manual operations constraints reduced through automated programs and remote access.
• Security risks of data breaches can be overcome by in-flight optical encryptions and firewall protection.
• Lack of regulatory clarity, water supply shortages, intermittent electricity supply and scaling with minimal bandwidth cost are some of the operational issues.
With the phenomena of hyper-scale and edge computing initiatives supported by the land, power, water cooling, and fibre availability and driven by robust regulatory policies with a sharper focus on the development of IT infrastructure, India is poised to be the second-largest data centre market in the Asia-Pacific. With the goal to achieve global standards by 2020, organizations setting up data centre projects in India will leverage this demand and investment to great advantage.