The COVID-19 pandemic has significantly led to an acceleration of the digital transformation journeys of organisations. Data Centres are now being looked at as the backbone of the new online world order.
During South Asia Digital Week 2022 India edition. Thought leaders came together to discuss the market conditions, innovations, solutions and advanced technologies in a panel discussion titled ‘Data Centre – Backbone Of The New World Order’. The session was moderated by Jabez Tan, Head of Research, Structure Research. The panelists included Michael Goh, Vice President & General Manager- APAC, IRON Mountain Data Centers, Mayank Srivastava, Chief Development Officer, BDx Data Centres, and Vipin Shirsat, Managing Director, India, Princeton Digital Group (PDG).
India data center market Landscape
The landscape of the Indian data centre market, where it has come from the last two to three years during the COVID19 pandemic to today, is completely different.
“The most secular sort of growth that has not really changed in the last ten years. It is the enterprises, that these days are creating more information processing more information storing more information and consuming more information. I think that that trend will continue over a period of time and that is where most of the thing is coming from, but just to give you an example my office 365 has started giving the key analytics or monthly analytics, it tells me how quickly do I respond to emails and how much free time do I have and who do I work or collaborate most with. So that’s what organisations are doing. Even today there are a lot of on-premise setups that enterprises have, which will move to colocation or cloud,” said Vipin Shirsat, Managing Director, India, Princeton Digital Group (PDG).
There are new key use cases that are evolving and some of these use cases are around work from home for example or gaming, or remote education and these are the specific use cases that have evolved especially during COVID and there are a few industries that are way ahead of the rest when we look at this demand.
The first one is the BFI. It has traditionally been ahead of everyone and even today BFI leads the entire segment being its stock exchanges, domestic banks, or MNC banks while a select few want a captive environment for themselves but most of them are happy to go to colocation or for that matter even go to a cloud.
“These are system integrators technology companies who use the setup for their own consumption, as well as for their customers and they also require some kind of flexibility in the growth. So this segment put together will continue to grow, one segment which is very large, and yet to explode is the government. So the government has adopted certain policies to look at the cloud. There is a policy called cloud first basis in which the government has stopped creating its own data centers or Colocation Data Centers. There are policies to help other government departments to figure out how to go to cloud,” added Shirsat.
It could be a private cloud or a public cloud. It could also be a government community cloud and this segment is something that we expect to explode in the next two or three years.
There are these new-age organisations that are going cloud-first. Some of them have cloud-native apps and these organisations are something that we need to watch for how they grow and how much they contribute over the next two or three years.
“But I think our focus would definitely remain on the secular segment of enterprises growing and demanding more,” said Shirsat.
Increased demand for cloud
The internet companies are the new segments these guys worked on providers, but the data is of tons of guys who are not cloud providers and we’re still consuming the data.
“So that’s sort of the other big segment that we see gobble up a large sort of portion of demand. The interesting thing that we have noticed at BDX and otherwise, as I engage with some of the friends in these industries, is that many of them, though they started cloud-native, have now already moved on-premise. So yes, the enterprise is moving from on-premise to colocation cloud, but a reverse migration from cloud to colocation is a trend that we’re also seeing in BDX,” said Mayank Srivastava, Chief Development Officer, BDx Data Centres.
“Traditionally, when we talked about colocation 10 years ago, we used to sell a lot of single cabinets and two cabinets, kind of deals that have actually almost all gone now. When you read the global perspective. Most of these customers who used to acquire single cabinets and two cabinets business to companies are now going to cloud, because the cloud gives them the agility and the price,” said Michael Goh, Vice President & General Manager- APAC, IRON Mountain Data Centers.
He further explained that there is one thing more unique about India as compared to the rest of the world. The Indian market today is very much homegrown with local enterprises.
There are a lot of local enterprises building data centers in India and of course, they have to beat hyperscalers like AWS and Microsoft they’re all doing big in India. That’s fairly common. We see that all over the world. They are what we call the hyperscalers that are taking up to 60-70 per cent of the whole colocation market.
“India is unique from the rest of the other markets in the sense that there is a lack of Chinese players in India. I think that the people at Alibaba, the users, used to be rather aggressive, India, until the geopolitical situation set in and now you don’t see the Chinese players coming in. I think some of them are still in India but they’re not growing as far as what we see them grow in the other regions. They are growing very aggressively in the rest of the APAC region,” added Goh.
However, the good thing about this is that it actually forced the Indian landscape to change, where there is their own local content that’s coming out from India, on their own right and that’s building, that’s also going to drive demands for data centers in the next couple of years.
“These days almost every country that we are seeing there are trying to have local data privacy laws within the countries, I think, and that’s a natural thing to do. So, when we see decentralisation right to do all these markets,” said Goh.
