India poised to be the next Data Centre destination; expected to grow 2X times by FY25

By Anshuman Magazine, Chairman & CEO, India, South East Asia, Middle East & Africa, CBRE

India holds enormous potential to become the ‘next destination’ for data centers propelled by policy initiatives, widening customer base and increasing corporate requirements for data storage. With growing digital consumption patterns such as online gaming, online education, streaming, e-commerce, total internet hits etc., DC operators are expected to see a huge demand for data center space.

TRAI highlights that India currently has 1.2 billion people with unique digital identity, 637 million total internet subscribers, 9.1 GB data consumption per subscriber per month, 350 million number of smart phone devices and the increased adoption of cloud computing has created an unprecedented demand for DCs. Currently in India, the total internet hits have surged by between 50% and 70% whereas streaming has jumped by at least 12%. The absorption rate of online gaming transactions has increased to a staggering 97% and streaming jumped by at least 12%.

A recent report by International Data Corporation (IDC) by 2025 stated that the average person will interact with a smart device nearly 4,800 times a day. This projection is roughly triple of where we stand today. The smarter devices there are, the more data will be required to run them. Increasing amounts of data consumption means that data centers will need to keep pace to process, store, connect and analyze it all, which will increase the demand for data centers themselves, as well as the resources to run them.

With the ongoing COVID-19 pandemic, this projection will be realized sooner than later. The data centre sector is one of the best protected in the current downturn. Data centres are playing a critical role in keeping the country literally online, as the place where everything digital is stored and processed. All of the applications we are using to function effectively during COVID-19 are ultimately powered by data centres, and therefore the role of the data centre today is critical for all aspects of life.

The evolution of DCs in India can be traced back to 2007 to the era of the dotcom boom, which resulted in a growing need for DC operators. In the current stage from 2016 onwards, the data requirements of occupiers have started growing, resulting in operators constructing hyper-scale data centers. Occupiers are also now increasingly using the hybrid cloud (colocation + private/public), HCI, and multi-cloud deployments.

Technology and automation provide a significant opportunity to make steep changes in terms of how data center operations evolve as we move forward in the next 3-5 years. In India, Data centres will continue to enable the digital world, which has been more crucial than ever during this time.

CBRE insights highlight that Data centre capacity is expected to grow 2X times by FY25 from the current 500-520 MW and markets across Mumbai, Chennai, Bangalore, Kolkata, Hyderabad, Pune and NCR are expected to witness supply addition of upto 40% in 2020.  Out of this, Mumbai currently leads with 41% data centre capacity, followed by Bangalore (17%) and Delhi (16%).

The future of Data Centers in India
The demand on outsourced Data Centre solutions has increased in India and occupiers would require flexible, scalable DC solutions that are both operationally and financially optimal. Technology and automation will provide a significant opportunity to make steep changes in terms of how data center operations evolve as we move forward in the next 3-5 years with trends expected to shape the Data Centre (DC) industry: –

Fund deployment towards DCs to rise
CBRE expects that global players will continue to take interest in investing in the country, with a focus on backing leading operators or funding prominent developers to foray into the DC segment in 2020. Further, against the backdrop of the COVID-19 situation in India, corporates would be inclined towards investing in the cloud segment as business moves online and both employees and employers prefer the work from home option.

Transition from captive to co-location and cloud DCs
Occupiers’ demand for co-location space over captive DCs is further likely to boost due to categorization of third-party DCs as ‘Essential Services” ensuring uninterrupted and uneventful operations even during a pandemic situation like the world is facing today. With regulatory requirements for data storage expected to be implemented in the coming quarters, CBRE anticipates that corporates would now seriously re-evaluate their DC portfolios in the country.

Edge computing to become a part of DC portfolios
CBRE anticipates that cities such as Kolkata, Pune, Gurgaon, Kochi and Jaipur, particularly, are likely to be amongst the first ones to witness edge DCs in the next few years on the back of their ability to service specific geographic zones.

Sustained policy impetus to spur DC demand
The passage of policies such as the National E-commerce Policy and Personal Data Protection Bill will mandate Indian consumers’ data to reside within the country, thereby boosting the demand for data centers.  Further, large-scale, nationwide initiatives such as ‘Make in India ‘, ‘Digital India’ and Smart City Mission in particular would further augment DC demand.

The widening net of e-commerce in India will further boost the DC segment as the sector increasingly needs help in managing its growing database. Another demand driver will be the Smart City initiative, through which the government is focusing on shaping e-governance across the country. Policy impetus such as the National E-commerce Policy, Personal Data Protection Bill, proposed policy on Data Center Parks and digital initiatives by the government will accelerate demand. The COVID-19 situation will further propel the next wave of growth in the sector and most importantly, the proposal to give DCs the coveted ‘Infrastructure status’ will place them high on global investor radar.


If you have an interesting article / experience / case study to share, please get in touch with us at editors@expresscomputeronline.com

Anshuman MagazineCBRE
Comments (0)
Add Comment