As the Indian data center industry matures and comes of age, it moves closer to capturing a big share in the global data center market.

The Indian data center industry is experiencing explosive growth. The expansion of online users and increased transactions are resulting in an online population of 462 million to reach 34 percent of the population, moving from 3.54 million in 2015 constituting 26 percent of the population.

While the Indian environment is largely attributed to the infrastructure silos of the past and owning heterogeneous environment data centers, the time is now ripe to push toward operational excellence, productivity, and performing strategic chores, even if it means to acquire the services of a well-established service provider. Today's service providers are far more sophisticated and future-ready in terms of their services and other offerings than they were in the past. They are well positioned to assist organizations achieve their new-age business goals.

One of the biggest issues relating to the data centers of today is their low level of resources utilization resulting from resource stranding. Correcting this issue is vital as unutilized resources essentially amount to wasted money, both in the form of infrastructure upkeep and lost opportunities.

Virtualization technologies alone have not been sufficient in maximizing resource utilization, one reason being that IT infrastructure is still largely based on hardware-defined boundaries. In order to surpass these boundaries, ICT industry players and research communities have been working toward realizing a true solution by developing new data center architectures built upon hardware disaggregation and programmable infrastructure.

In contrast to traditional hardware-defined IT infrastructure, this approach treats resources as individual, modular components. From a maintenance perspective, this is a major boon, as service providers can upgrade or replace precise, individual physical resource components without having to unnecessarily replace adjacent components. From the perspective of resource efficiency, this kind of modularity offers completely new ways of optimizing and sharing resources.

The data center is reimagined in order to scale beyond the cost and capacity limitations of today's architecture. It is smarter, more flexible, and better able to achieve increased resource utilization levels while reducing total cost of ownership.

Transforming data centers in this way goes beyond hardware to impact the software layer, including hypervisors, operating systems, and cloud platforms. Composition and resource orchestration, workload execution and - ultimately - data and applications are just some of the areas transformed as a result. In fact, this architecture allows for entirely new approaches to building, managing, and running services and applications.

Market Dynamics

The Indian data center infrastructure market is estimated at '12,325 crore in 2015, poised to reach '29,000 crore by 2018. India is poised to be the second-largest market for data centers in Asia-Pacific by 2020 and investments are expected to reach a whopping '45,000 crore. With this, the country's share in the global market will also increase.

With digital data consumption expected to increase at twice as fast as the worldwide rate from being around 40,000 petabytes in 2010 to 2.3 million petabytes in 2020, India is becoming a robust domestic data consumption market. The market is expected to see a strong resurgence of growth-related projects across verticals viz., banking, insurance, telecom and government segment and further with the liberalization of the Information Technology market, digital-commerce and social media, the quantitative impact of datacenter traffic is apparent.

Captive data centers have a dominant share of the market, albeit they are gradually ceding ground to third-party service providers, which accounts for a 40 percent?share, compared to 20 percent five years ago. Over 70 percent of the projected growth in third-party data centers is driven by verticals of BFSI, media and entertainment, and telecom and retail among others. High opportunity cost of reliable power supply as well as real estate is increasingly tipping the scale in favor of the third party. Third-party data centers are increasingly consolidating their position through steps in technology and ?value-added services, with outsourcing requirements of BFSI and government services fuelling the multi-tenanted data center segment and telcos transitioning to 4G/LTE technology.

2015 - A Year of Investments

Many tech giants such as Microsoft, Amazon, IBM and NTT Communications, Tata Telecommunications, and the government's own National Informatics Centre have set up data centers this year.

Netmagic has opened India's largest data center in Mumbai. The facility, operated under the Nexcenter brand, hosts up to 2700 racks in a 300,000 sq. ft. building. It offers a wide range of infrastructure services including managed co-location, dedicated hosting, cloud computing, managed security, and disaster recovery.

NTT Comms is a part of Japanese conglomerate NTT Corporation with more than 250 data centers worldwide. It acquired a majority stake in Netmagic in 2012 and proceeded to invest heavily in the Indian market.

With this launch, Netmagic now operates nine data centers across India - five in Mumbai, two in Bengaluru, and one each in Chennai and Noida. Data centers in Hyderabad and Pune are also in the offing.

IBM has launched a SoftLayer public cloud data center in Chennai, India, its second in the subcontinent.

The Chennai site offers IBM's full range of SoftLayer infrastructure services to local customers including Tata Sky, Bharat Light and Power, Janalakshmi Financial Services, and Mankind Pharma. It joins an existing data center in Mumbai that opened in October, 2014.

Microsoft has opened three data centers in India. The new data centers in Mumbai, Pune, and Chennai offer a range of cloud capabilities including Microsoft's Azure cloud, and Office 365.

The launch makes Microsoft the first US public cloud provider in India to offer public cloud service from a local data center, allowing it to offer better latency and performance than competitors that are based overseas.

Developer-focused cloud service provider, DigitalOcean, moved into its first data center in Bangalore and opened up the region to developers.

Cloud service provider, Exuberant Support for Data Services (ESDS), launched its second data center at Mahape. The new data center is spread over 80,000 sq. ft., and offers both private and public cloud hosting for customers. In addition, it also supports an on-premise hybrid cloud platform that will meet the needs of both enterprises and small and mid-sized enterprises. ESDS now has a total data center footprint of over 100,000 sq. ft. of floor space across two facilities.

Amazon's cloud service arm, Amazon Web Services (AWS), has built its data centers in around five locations in Mumbai as it looks to tap on the growing potential of the Indian e-tailing and cloud computing space.

The move comes at a time when Amazon's closest rival in India, Flipkart, has already started moving its data centers in-house. Global companies with customers in India can use AWS's infrastructure to build their businesses and run their applications in the cloud. This move will also help AWS to securely store the companies' data in India with single-digit latency.

In May 2016, ST Telemedia and Tata Communications entered into definitive agreements whereby ST Telemedia Global Data Centers will acquire a 74 percent stake in Tata Communications' data center business in India and Singapore. Tata Communications will remain as a significant shareholder, with the remaining 26 percent stake. The joint venture will include Tata Communications' 14 data centers across India and its three Singapore facilities.

While data security and regulatory concerns pose a challenge for many enterprises in the data center industry, they are also creating a massive opportunity for those firms that are able to help customers manage the compliance risk and shape this through their data center strategy. Like global CIOs and CTOs, the strategy of many of the Indian tech heads revolves around a hybrid data center approach that involves a blend of many strategies such as renting data center space, turning over some applications to a Software-as-a-Service (SaaS) vendor or disaster recovery (DR) to an Infrastructure-as-a-Service (IaaS) provider, and continuing to update and virtualize their own data center infrastructure and develop an internal cloud. As IDC asserts, the future continues to lie in a hybrid data center.

Growth will continue to be driven by data center-hosting players, high-speed Internet bandwidth service providers, hardware vendors, power and cooling solution providers, and system integrators. As the market expands, some new players other than IBM, Microsoft, Ctrl S, AWS, Netmagic, Tata Communications, and Sify may also move into the data center investment market. And as the market continues to mature, it is likely to see greater creativity and complexity being used in terms of the investment structures and options available.

Some graphics have been sourced from a report by Alchemy Research and Analytics


 

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