The global data centre market is estimated to continue growing at between 12-14% CAGR over the next few years. Interestingly, a large chunk of this growth will be driven by markets in APAC such as India. The growth is primarily driven by the need for scalable, cost effective and efficient infrastructure to support the sheer scale of digital shift.
The digital economy of India is growing rapidly and is expected to continue to grow in the coming years. The country is also experiencing a massive demand for public cloud computing infrastructure technologies.
According to real estate firm, CBRE, data centre investments are expected to cross a massive $20 billion by 2025. In the first half of FY 2022, the data centre capacity exceeded 9 million sq ft with more than 600 MW capacity in India, while by 2024, this capacity is expected to nearly double, with more than 400 MW currently under-construction.
As per findings by the India Brand Equity Foundation, India is poised to produce a remarkable 2.3 million petabytes of data annually by the end of the year 2023, reflecting a ten-fold surge from the figures recorded in 2016. This accelerated trajectory of digitization within India underscores an unprecedented requirement for data centres and cloud services.
According to some estimates, the Indian data centre market has witnessed significant growth in the last few years with capacity having risen nearly 4X in the last 5 years or so.
“At last count, there were more than 25 new players who were at various stages of investment intent or project execution. We believe that the Indian data centre market will witness sustained 18-20% growth this decade, but not all players will be able to capitalize on the same,” opines Sumit Mukhija, Chief Executive Officer - ST Telemedia Global Data Centres (STT GDC India). “At some point, I do feel that the market will witness a reality check driven by geographical oversupply, complexity of the operating environment and overdependence on certain target segments.”
Key initiatives in the data centre space
The demand for cloud computing infrastructure in India is expected to grow as the adoption of cloud-native technologies among startups and SMBs is rising due to the latest technological advancements, such as generative AI applications, digital payments, and intelligent IoT devices. To address these opportunities, data centre providers are all geared up and opening data centres on Indian grounds. Local players also have an advantage over global players in terms of knowing the market conditions well, and hence they are leaving no stone unturned with new launches, and innovative offerings.
Sify has several green data centre projects in the pipeline, with three Greenfield data centre projects currently at the design stage, which will add about 110MW of capacity. Plans are on to add 350MW in the next 4 years. Sify also has a partnership with Vibrant Energy for over 200MW of PPAs for wind and solar power.
“Sify’s data centres offer various automation benefits like real-time visibility into key Data centre operations and assets, and optimum utilization of resource capacity,” says Girish Dhavale, CTO - Data centers, Sify Technologies Ltd. “This ensures accurate demand forecasting and capacity planning that helps proactively eliminate downtime. Sify also provides the infrastructure for customer provisioned networks on demand.”
Yotta's vision for its data centre business in the next year revolves around a steadfast commitment to innovation and expansion. Its expansion plan includes five additional data centre buildings at Yotta’s Greater Noida Data centre Park, increasing its total combined capacity to 160 MW with a Rs. 39,000 crore investment over the next 5–7-year period.
“Our upcoming data centres in Pune and Gift City, Gujarat, along with 100 edge data centres in smaller cities, exemplify our dedication to taking digital transformation to the last mile,” says Rohan Sheth, Head- Colocation & Data Center Services, Yotta. “Beyond the country’s borders, our international foray into Dhaka, Bangladesh, and exploration of Southeast Asian markets reflect Yotta's global ambitions. With a planned investment exceeding Rs. 60,000 crores, we are poised to deliver 1000 MW of data centre capacity by 2030 across key regions.”
Since its inception, Yotta has remained committed to delivering top-tier solutions, with a continued focus on hyperscale data centres and a host of managed services for a diverse clientele, the public sector and enterprises of all sizes. “Our data centre, cloud and managed IT services are further complemented by our holistic Everything-as-a-Service (XaaS) portfolio, which encompasses cybersecurity, IT service management, enterprise asset management, SAP services, endpoint backup and recovery among others,” says Rohan.
STT GDC India is acutely aware of the unique position it occupies as a data centre operator, catering to the society, governments, and the global technology industry to function.
“As businesses actively move to mitigate climate change, the onus has fallen on businesses like ours to take the lead, maintain the social license to operate and ensure full alignment with national and international sustainability agendas,” states Sumit Mukhija of ST Telemedia Global Data Centres (India).
He further adds, “Over the short term, the hyper competition will deepen with attendant impact on pricing etc. but our commitment to the India digital growth story will continue unhindered. We will continue to see us executing plans to treble our capacity and creating the organizational wherewithal to execute the same. We are investing in our people, piloting recent technologies, and exploring potential new markets. Our vision for STT GDC India is to continue to enable the India digital revolution by world class data centre infrastructure solutions in a sustainable, socially responsible, ethical manner fully compliant with applicable laws and partner our stakeholders through this journey.”
STT GDC India also has a clear ESG framework, roadmap, and measurability on progress. Its ESG strategy centres around three high-level goals - Carbon-neutral data centre operations by 2030, a safe, secure, and inclusive workplace and an ethical and responsible operations.
DigitalOcean provides a resilient cloud computing infrastructure, a crucial pillar for delivering reliable on-demand services. It designs and implements its data centres like a global telecommunications service provider-style network to reduce network effects while improving the overall customer experience.
“DigitalOcean uses commercial data centre providers to house our infrastructure equipment, and we customize the cloud computing infrastructure needed to meet the growing demands of startups and SMBs,” explains Kirthi Kumar - Senior Product Marketing Manager, DigitalOcean. “Our data centres feature our private Internet Edge and backbone network - an information super highway designed to carry customer traffic instead of routing on the public internet for a great cloud experience. For instance, our Sydney data centre is connected with our San Francisco and Singapore data centres using the lowest latency links and end-to-end physical path diversity to ensure exceptional reliability.”
With its recent acquisition of Paperspace, DigitalOcean is also in a great position to lower the technical barriers to enable the adoption of AI-based cloud solutions, specifically within the small businesses and startups community globally.
As the leader of the Greenfield data centre initiative, CapitaLand Data Centre is committed to establishing industry gold standards in every facet, including energy efficiency, security protocols, and customer service. Its planned Data centre projects in Navi Mumbai, Hyderabad, Chennai and Bangalore will be a testimony to these parameters.
“Evolution of the digital landscape necessitates real-time solutions and instant scalability. At CapitaLand Data Centre, we don't just respond to these demands; we anticipate and meet them proactively,” says Surajit Chatterjee, Managing Director, Data Centre, India, CapitaLand Investment.
“Our infrastructure is modular and scalable, allowing for instantaneous expansion and contraction. This elasticity ensures that our clients, whether Large Enterprises or Hyperscalers, can access the required resources as per their requirements. In the future, we will also be looking to integrate edge computing.”
Additionally, CapitaLand is fostering partnerships with tech industry leaders, local businesses, and educational institutions. “The industry of data centres is at a turning point, particularly in India. CapitaLand is thrilled to be a part of this journey, not as mere observers but as pioneers leading the way,” observes Surajit.
The core of ESDS data centre's architecture is robust virtualization based on its patented cloud technology, which enables it to allocate and manage resources efficiently. The ambition of ESDS data centre business for the upcoming year is primarily centered on innovation, sustainability, and client-centricity.
“We are dedicated to forging a distinctive future as the landscape changes in response to the advent of Greenfield data centres by various industry players,” says Piyush Somani- Chairman & MD - ESDS Software Solution Ltd. “Our goal is to reduce environmental impact while maintaining unwavering operational excellence by setting new standards for energy efficiency. We aim to take the lead in ethical data centre operations by incorporating renewable energy sources, developing cooling technology, and embracing eco-friendly architecture. We work closely with our clients to anticipate their needs and deliver specialized, long-term solutions that fuel their success.”
NTT's data centres provide services through a combination of following factors like World-class infrastructure, Design Flexibility, Advanced automation and processes, Global network and has points of presence in over 200 countries and territories.
“With the recent launch of the Chennai 2 Data centre campus in July 2023, NTT’s data centre footprint in the country has grown to 16 facilities, with more than 3.2 million sq. ft. (297289.728 m2) and 204.8 MW of IT power,” says Vimal Kaw, Colocation Product Head and New Site Selection Lead, NTT Ltd. “With the upcoming expansions, this figure is projected to increase to 349.2 MW by March 2024.”
New NTT data centres are coming up in Navi Mumbai 1 (Mahape campus), Navi Mumbai 2 (Airoli campus), Chennai 2 (Ambattur campus), Bengaluru 3X, Noida (DEL 2), Central Mumbai campus (Chandivali), Kolkata, and Bengaluru 4 campus.
Power outages marring data centre growth?
Power is a critical input for data centres. While there has been a spur in demand for data centres, the required power for the same is increasingly a challenge. Talking about India, while the power situation has vastly improved compared to a decade back with the power generation capacity having doubled to 416 GW, transmission, and distribution infrastructure is a significant challenge to avail power in the rapidly growing data centre hubs.
“In most established markets, from Northern Virginia to European hubs like London, and Amsterdam, power is increasingly a bottleneck for expansion for operators,” says Sumit Mukhija. “The power availability problem is real, especially so against the backdrop of the global energy crisis, and is influencing operator decisions in the movement to adjacent geographies closer to the traditional hubs and movement to new geographies such as India, rest of Southeast Asia, South America, etc.”
“In India, it is a journey that has just begun,” observes Girish of Sify Technologies. “Hence it is only natural that power-dense DC footprint will be concentrated around the economic centers of metro cities. However, as the connected workspace expands beyond the cities, smaller iteration of the Data centres in the form of edge DCs have begun to spring up both close to the site of operations and customers.”
Rohan Sheth of Yotta Data Services also feels that with the recent power demand surge, of a 4.4 percent year-on-year increase to 139 billion units in June 2023 and just a 0.4 percent growth in power generation capacity in Q1 FY24, accentuates the urgency for data centre players to look at alternate sources and models to ensure continuity of operations. “Data centre players are now going for in-house power backups. At Yotta's NM1 and D1 data centres, we have a 48-hour operational back-up capacity for outages. Various state governments like Tamil Nadu and Uttar Pradesh have implemented dedicated data centre policies which provide access to power infrastructure with special provisions.”
The data centre market in India has tremendous growth potential given the available power supply constraints in data centre markets in North America and Europe. While the government is developing a conducive environment to serve the needs of data centres, the industry also lays a significant emphasis on achieving greater efficiency in data centres to reduce power consumption.
“NTT is aware of the challenges posed by the availability of power supply for data centres. That's why we have been heavily investing in building our own renewable energy generation facilities,” supports Vimal Kaw. “This would help our data centres become free from reliance on conventional fossil fuel-based energy that is supplied by the grids.”
Trends in the data centre space
As data centres evolve in India, there is also a marked shift in the kind of services they offer. While the conventional services like colocation continue to be a key offering, data centres will increasingly serve as an enabler of the complete digital ecosystem.
Here are some of the trends that are going to dominate the data centre market in the years to come -
The rise of edge computing: We are seeing the rise of edge data centres, revolutionising the way data is processed and delivered. It will become increasingly important to move data processing and storage closer to the end user. Computing at the edge will help to improve latency and reduce bandwidth requirements, which is essential for applications such as self-driving cars, virtual reality, and augmented reality.
As demand increases from Tier 2 and Tier 3 cities increases rapidly, localized edge data centres will also be in huge demand. A BCG report released in 2022, says that smaller cities are playing a huge role in e-commerce growth, with 30 of the top 50 mature e-commerce markets belonging to small towns.
Managed Services offerings: Managed service offerings will increasingly become a part of the bouquet of datacentre players. This, combined with cloud computing will drive the way services are being delivered to clients – a marked transition from data storage to managed services.
Data centre investments will explode: With data centres evolving into dynamic hubs that fuel the digital ecosystem, empowering cloud computing, high-performance computing, networking, and IoT, this market in India is expected to continue to grow in the coming years. This will also be driven by the government's focus on digital infrastructure development and data localization norms.
Deepening of the sustainability agenda: Amidst India's ambitious Net Zero targets by 2070, data centres are transitioning to renewable energy, enhancing sustainability, viability, and energy efficiency. Sustainability has become central to the digital business and especially more so in the case of data centres that are conventionally seen as power dense businesses with a significant carbon footprint. As Environmental, Social and Governance (ESG) activities receive increased attention, enterprises are focusing on selecting only those service providers who have sustainable practices and processes.
The growth of AI and ML: AI and ML models require a lot of data to train, and data centre provide the infrastructure to store and process this data. AI and ML could therefore well drive the demand for data centre infrastructure to an unprecedented scale. Data centres that integrate seamlessly with public, private, and hybrid clouds will have the upper hand.
“Amidst the digitisation boom, there is an increasing capacity and complexity of design, which calls for data centres to be operated using AI / ML based automation with an analytical approach. With the adoption of AI/ML tools, data centres can achieve the highest uptime / availability, better power utilization, effectiveness, etc,” says Girish of Sify Technologies.
Rise in Multi Cloud and Hybrid Cloud: Enterprises are moving to multi-cloud environments to enable the best of each vendor offering. Similarly, enterprises increasingly seek hybrid cloud environments that combine the accessibility, control, and security of a physical data centre with the native benefits of cloud/ multi cloud. We will see a continued increase in the use of hybrid and multi-cloud strategies with a sustained role for data centre providers to be pivotal in orchestrating the required solution for end clients.
Remote data centre capabilities will become more popular: Remote data centre management can allow data centre operators to manage multiple data centres from a single location, reducing the need for on-site staff and potentially lowering operating costs. It can also allow for more flexible and scalable data centre management. In 2023, more data centre operators are expected to push for remote data centre operations, to improve efficiencies.
