As Indian enterprises become increasingly Digital, Colocation services are seeing a resurgence of sorts.
India has 1.3 billion people with a unique digital ID, 700 million internet subscribers, 500 million smartphone users, and 350 million-plus people on the social network.
“So, these are numbers which drive the sheer demand of digitisation, coupled with data privacy laws and the pandemic are key factors,” said Ramaiy Kapoor, Head of Investment & Commercials- DC Group CapitaLand India. Kapoor was addressing delegates at W.Media’s South Asia Cloud & Data Centre Awards Summit.
He further added that in the going forward, we probably may have a market of 450 megawatts installed capacity in India, which might double or triple over the next five years and factors such as data localisation, adoption of cloud services, smart cities, as well as things to come will be 5g and Internet of Things and Artificial intelligence.
All these will all drive these needs for computing space, as well as data storage space, which data centers will provide new opportunities.
The growth rate of cloudification would be 20-25 percent. What has incidentally also happened is the preferred micro-markets of Mumbai and Chennai for data centres, the land prices also have grown in this fashion of 20-25 percent.
“Without organisations getting the opportunity to lock in a land parcel, which is an interesting scenario,” said Kapoor. Regarding tier I tier and II cities, there are some older industrial corridors, where the industry is either moving from infill locations to locations that are slightly cheaper or domestic industries.
Already, IT companies provide services and infrastructure in similar locations where there is power infrastructure available as well as fiber, which are two essential components for a data centre.
There is an availability of land, data centers are required to be around this IT cluster, as well as away from residential and other social places of congregation.
“So that is one change which has come about or that is one key interesting point in the market. Also, when we spoke from an occupier’s perspective earlier, there’s a shift from on-premise data centers to cloud and colocation really provides that IT infrastructure for the cloud,” pointed out Kapoor.
For on-premise colocation and cloud, the industry is moving from a 70:30 model from 2017.
“A model where one premise might be just 10 percent colocation might be 50 percent and cloud might be 40 percent of the demand split.
So, definitely, this is going forward, it makes sense for the occupiers. For the IT infrastructure to be outsourced, while we can maintain the reliability and scalability of the same and this will give an opportunity even say, we look at startups today, for them spent on their compute the storage may not make sense to do it on-premise anymore, they will go for a cloud which cloud service provider which would be making the most economical sense and probably later on as they scale up the move towards a colocation facility or make a hybrid sort of model which would emerge,” said Kapoor.
The future DC locations
Going forward, there will be pressure on power, space, usage of water and usage of network connectivity, which is kind of concentrated in certain parts of the city. That is also a kind of a choking point.
“To some extent, you might have seen certain announcements in certain developed countries like the Netherlands, like in Amsterdam, Ireland, Singapore, that government has stopped or paused the development of new data centres in those cities,” stated Rahul Dhar, Country Director- Data Centres, Microsoft Corporation.
“So, can you imagine that it is already happening, you know, we should be cognizant of the fact, in India also, that we can’t come continuously pressurise some portion of the city only, so, we have to get around this area’s so 100 percent, to your question, that is a future possibility,” added Dhar.
