Growth of data centers in India

There are numerous statistics that prove the exponential rise of the data centers in India in the overwhelming year that 2020 was.

February 05, 2021 10:34 IST | India Infoline News Service
With more than 14 data center investments in India from January to September 2020, the Indian data center industry is expected to witness immense growth. As a matter of fact, this industry has been growing at three times the global rate. There are numerous statistics that prove the exponential rise of the data centers in India in the overwhelming year that 2020 was.

Image source: Datacenter Dynamics

What does the pandemic have to do with the growth of data centers?

A lot.

In fact, in the first week of the lockdown itself, there was a 13% rise in data usage in India, as per a telecom ministry report. The pandemic has led to a worldwide spurt in internet usage due to people working from home, video conferencing, shopping online, using social media, and consuming content at a much higher rate.

Higher data usage means larger data storage requirements – thus translating into increased demand for data centers.

Key factors attracting data centers investments in India
The current global pandemic is not the only factor driving the growth of data centers in India in 2020. Here are four other key factors:

1. Increased data demands from global companies in India
From the year 2019, Indian real estate and infrastructure companies like Adani Group and Yotta Infrastructure announced their plan to set up data centers to meet the demands of global companies like AWS, Microsoft, and Google.

Image source: BW Smart Cities

Apart from the presence of these hyper-scaling companies in the country, favorable factors like high data bandwidth, growing domestic market, and cheap power are also driving the data center industry.

2. Increased Data Usage
Even before the pandemic crisis, India was projected to be the second-largest digital economy by McKinsey – with the IT/ Communications sector set to double by the year 2025.

Image source: Ministry of Electronics & IT

Government initiatives like Digital India, National e-Governance Plan, and e-Visa are expected to grow data usage in the country – thus boosting the demand for data centers.

3. Adoption of Advanced Technologies
Another key factor is the increasing adoption of data-centric technologies like Big Data, Cloud Computing, and the Internet-of-Things (or IoT).

Image source: Global Data

Apart from these, technologies like Artificial Intelligence and Machine Learning are being used for data analytics. Data centers – with their advanced IT infrastructure and computational power – are now a vital cog in implementing these cutting-edge technologies.

4. Global Companies setting up base in India
Over the last few years, global players like Fujitsu, IBM, Microsoft, and Schneider Electric have set up their base and have an active foray in the data center industry. Other private companies like Digital Realty and Adani Group are also partnering and investing in data centers across the country.

Image source: The Tech Portal

Going forward, the data center industry will witness the growing presence of global companies through either partnerships or acquisitions in the Indian market. This will make India a key communication hub for data-related activities at a global level.

Challenges facing the data center industry in India
It is not all a “bed of roses” for the Indian data center industry going into the next decade. Here are three of the biggest challenges facing this industry:

● Power availability
Power availability – around the clock – is an absolute must for smooth data center operations. Even though India has been successful in improving its available power, the challenge would be sustaining it against the growing market demands.

Apart from coal-generated power, the country has increased its solar power output – which also needs to be integrated with the national power grid to ensure continuous power supply for data centers and consumers.

● Connectivity
The rapid increase in hyper-scale data companies and online consumers also means that connectivity is a key challenge for data centers in India. The advent of the 5G Internet technology in 2021 is likely to boost the adoption of IoT devices – and will be essential for data center investments in the country.

Adversely, poor connectivity could translate into poor revenues, lack of investments, and the inability to cope with increasing data demands.

● Carbon emissions
When it is a matter of growing power consumption, the data center industry will be under focus for its carbon emissions or footprint. Global data centers are already facing scrutiny for their carbon footprint.

Thanks to growing concerns around high power consumption, one environment-friendly development has been the adoption of in-row cooling containment solutions – with intelligent IoT sensors – instead of the traditional water-cooling solutions for IT infrastructure.

As compared to a global CAGR of 7% until 2022, the Indian data center industry is projected to grow at a CAGR of 23% during the same period. This presents a great opportunity for India’s digital economy to cash in on growing data demands and the entry of foreign players in the data market.

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