Reader's Poll

Which of the following technologies/concepts are likely to witness significant traction this year?
Any data to show


Tele Data

Mobile Subscribers Yearwise comparision

  • JUser::_load: Unable to load user with id: 1679

A Growing Market: Increased IT uptake drives demand for data centres

December 07, 2015

According to research by US multinational technology company Cisco Systems, the traffic flowing through data centres worldwide will more than triple between 2014 and 2019 to reach 10.4 ZB per year. This will primarily be driven by the rapid uptake of IT services as businesses look at automating processes, finding additional revenue streams, increasing productivity and efficiently utilising their resources. The uptake of IT as a service is the primary reason for the increased demand for storage space, which, in turn, is driving the growth in the demand for data centres among large as well as small enterprises.

Even though India’s data centre market is huge, it is still small compared to that of other countries. As per US firm Synergy Research Group, the US accounts for 44 per cent of major cloud and internet data centre sites, and is followed by China, which accounts for 10 per cent. The other major countries are Australia, the UK, Japan, Germany and the Netherlands, each of which accounts for 4-5 per cent of the total. India is fast emerging on the data centre map as it receives increased interest from some of the biggest players in the data centre industry.

Key developments in India

In India, data centre operators are divided into two categories: captive and hosted. While captive data centres are for captive use by a particular enterprise, hosted data centres are owned by third-party service providers that offer infrastructure and maintenance services to clients through their own data centres. In India, the majority of data centres are for captive use, with some of them also providing third-party services. However, data centre solutions are being increasingly adopted by large and small enterprises across business verticals. According to estimates by Gartner, the Indian data centre market is expected to reach $2 billion by the end of 2015, marking a 5.4 per cent increase over a market size of $1.92 billion during 2014. This is likely to be driven by the strong resurgence of growth-related projects across verticals like banking, insurance, telecom, as well as those under the government. Indian enterprises will focus on building intelligent data centres that optimise existing hardware by using additional software capabilities. A number of hosted data centres have been launched over the past few months, and others are in the offing.

The key developments in this regard are listed below:

  • In November 2015, IBM Corporation opened its first public cloud data centre in India, in Chennai. This was part of the US company’s previously announced plan to deliver cloud services from 46 new data centres across the globe. IBM is of the view that the Indian cloud market is poised for exponential growth, and is hence taking steps to tap it. In 2014, IBM had opened its first private data centre in India in Mumbai to specifically cater to the rising demand for cloud services from banking and financial services, the telecom industry and government agencies.
  • In October 2015, Netmagic Solutions (owned by Japan-based NTT Communications Company) launched a new data centre in Mumbai, its ninth in the country. It invested about Rs 7 billion in setting up this 300,000 square foot data centre, which took the company’s total floor space capacity to 600,000 square feet. Netmagic is now planning to invest about Rs 20 billion in setting up three new data centres in India, at Mumbai, Bengaluru and Noida, over the next three years. While the floor space capacity of the Mumbai and Bengaluru centres will be between 250,000 and 300,000 square feet each, the one in Noida will have a space capacity of 150,000-200,000 square feet. The company has already invested close to Rs 12 billion across all its data centres in the past three years.
  • In September 2015, Microsoft launched three data centres in India – one each at Chennai, Mumbai and Pune. The technology giant will be using these centres to offer its cloud product, Microsoft Azure. Microsoft currently offers cloud services in India with data centres located abroad. A local presence is expected to help it tap the growing demand for cloud services in sectors like banking, financial services and insurance.
  • In another development, Singapore Technologies Telemedia has expressed interest in acquiring Tata Communications’ data centre business. While no agreement has been reached yet, the deal has reportedly been valued at around Rs 45 billion, with the buyer also acquiring 74 per cent of data operations across 44 locations in India and overseas. The Tata Group will hold a minority stake in the business.
  • Hitachi Systems Micro Clinic, an end-to-end IT solutions provider, is planning to set up a data centre in India as it seeks opportunities in projects like the Smart Cities Mission. The company is in talks with Netmagic Solutions for setting up this centre. Hitachi Systems Micro Clinic was formed after the acquisition of the Indian firm Micro Clinic by Japan-based Hitachi in 2014.

The way forward

India’s data centre market is maturing rapidly, but some constraints remain. The primary concern of most data centre operators is that of business continuity, with a focus on reducing energy consumption and enhancing manageability, scalability, efficiency and security. In India, the lack of reliable power is one of the key constraints affecting industries across the board. This translates into data centre operators placing greater reliance on power backups, leading to the increased cost of operations. This affects a data centre solution provider’s ability to expand.

The other big challenge in front of the data centre industry is the high cost of internet bandwidth. Although bandwidth costs in India have come down in recent years, they are still higher than in most Western countries. Another key challenge relates to the high charges of cable landing stations, which are the points at which submarine fibre optic cables enter and exit the mainland. Station owners often impose hefty charges for allowing the passage of internet traffic. Apart from these, concerns regarding the enforceability of contracts and law and order are deterring IT companies from setting up server units. The above constraints are pushing enterprises to demand more and more third-party data centres. There is now a demand for IT infrastructure as a service so that companies don’t have to invest in captive data centres.

Going forward, Gartner estimates that investments in the Indian market will primarily be fuelled by data centre modernisation initiatives to ensure uninterrupted and better quality of service. Indian enterprises will focus on creating integrated data centres for optimising existing IT assets and delivering non-stop IT services to businesses. This will drive greater uptake of the public cloud and software defined networking. Gartner further estimates that India’s public cloud market will reach $838 million by the end of 2015, an increase of 33 per cent over 2014, and finally reach $2 billion by 2018.

In sum, the move towards cloud computing and the rising demand for storage space are expected to create vast growth opportunities in the data centre market.


To post comments, kindly login

 Your cart is empty

Monday morning

Monday morning