The Indian data center industry is very buoyant with space at a premium especially in the “Hotspots” such as Mumbai, Pune, Hyderabad, Bangalore and Chennai. Why the Hotspots? Well, it is the same all over the world. Hotspots or location is the name of the new game today. The industry seems to be on a stream to exceed the industry forecast of $4 Billion for 2020 as reported by various industry commentators and marketers.
The aggressive building plans for data centers in key locations are causing concern as land costs continue to rise and the availability of power is a constant struggle. In 2019, we have seen the emergence of two leading Indian real estate developers and infrastructure solution providers- Yotta Infrastructure and Adani Group announcing development of new data centers to support global hyperscalers and also to meet the demand of home-grown companies from the field of finance, retail and service, as they want to utilise colocation type data centers. It is so evident to say that good days await the Indian data center industry with a lot more challenges.
Further, India is dominated by the colocation data center segment, which is the fastest area of growth for the data center industry. The growth is being fuelled by the global hyperscalers (AWS, Microsoft, Oracle, Google) requiring evermore space/capacity to support the Indian market demand.
Colocation data center is also benefitting from strong growth in companies wanting to relocate their own data centers within the colocation facilities and the adoption of cloud services, either gateways to global Cloud Providers or colocation data centers ability to offer their own cloud hosting and services to their clients. This trend is already seen in the US, Europe and parts of Asia and now, it is wide-spreading into India, as the country is being transformed as the Research and Development hub for many global Technology and Pharma companies. The other driving force of the trend is the expansion of the financial industry and government services at a fast pace.
Good times ahead
The adoption and implementation of cloud applications are still very small in India today. It is set to explode as more clients are readily accepting that cloud is the way forward to scale up their business growth and acts as a support system for various applications. Additionally, the government’s decision for data localisation against storing it outside the country is also a tremendous move that adds to the data center development in India. To reap on this opportunity, big hyperscalers are already preparing the grounds for major expansion within the Indian market, aiming to further extend their new builds within colocation facilities and are seemingly showing interest to build their own facilities.
As stated above, the new entrants to the India data center market- Yotta Infrastructure and Adani Group – are focusing on building a more “Wholesaler” model than “Retailer” in India by providing Land, Power, and building that meets the leaseholders’ requirements and specification that are potentially to attract any global hyperscalers, terming them as hyperscalers-dedicated data centers. As a testimony to this, recently Adani Group announced its tie-up with US-based Digital Realty Cooperation to foray into data center domain, while Yotta NM1 to go live in January 2020.
With all these developments, the year 2020 will witness the global colocation companies (NTT, Equinix, Digital Realty, etc.) start to focus and align their existing Indian businesses with global footprint. We are also expected to see new global players start their activities through either acquisitions or cooperation and start building a strong presence in India, making India a stronger link in the global communications highway. Importantly, with the 5G rollout expected in 2020, the role of Indian telecom industry plays a major role in reinforcing growth factor of the Indian data center market. For these, along with the legalisation that the Indian Government might consider to support, India needs to look into the aspects like installing more subsea landing stations, upgraded robust network infrastructure and introduction of new ISPs (internet service providers). These can be better managed through the use of optic fibres.
The biggest challenge for the whole of the Data Center business moving forward is summed up in these keywords: Power Availability – Connectivity Access – Carbon Emission. These are not just the Indian Market challenges but also prevailing in the global data center market. Power accessibility is always a challenge to the data center industry. Certainly, solar power has been significantly contributing as the largest power supply source. However, as the industry expands, the challenge lies in balancing the power demand against the market demand. Therefore, going forward, it is imperative to link solar power with regional and national power grids strategy which will eventually boost the smooth operation of data centers.
Connectivity is also going to be another challenge from 2020 due to rising demand trends of global hyperscalers and leading Colocation players. Managing access and availability of connectivity is very essential. The effects of not having access and available connectivity are disastrous to revenue growth, meeting performance expectations, and lack the ability to cope with increasing traffic demand.
On the other side, carbon emission is rapidly heading to the “Top of the List” and undoubtedly, it will become a big environment concern moving forward. Already, globally, the data center industry is under pressure to take drastic measurements to curb its carbon emissions. It is something to wait and watch as to how the Indian government and the industry plan to manage this.
By Alan Richardson, Business Development Consultant, AFL Hyperscale