The way forward for India’s emerging data centre market

• Given India’s strategic location and availability of submarine cable landing infrastructure, land supply, vast green energy resources, skilled manpower and favourable regulations, the country has the potential to become an APAC data centre hub.
  
• The India data centre market is expected to grow at a CAGR of 15.07% during 2022-2027.
  
• We see greater momentum towards building modern, software-controlled data centres through deployment of new-age digital technologies.

The Covid-19 pandemic has reinforced the importance of digital transformation across industries.

Workforces were shifted to productive work-from-home models almost instantaneously when the pandemic struck. Patients could no longer visit the hospitals and their doctors in person, so telemedicine use cases exploded.

Students transitioned to virtual classes, which was never anticipated, resulting in increased usage of HD collaboration apps. Physical retail locations were closed so reliance on e-commerce increased, further driving up data consumption on phones.

The impact of Covid-19 coupled with technology advancements such as cloud adoption, Internet of Things (IoT) devices, high-definition (HD) video apps etc. has put massive pressure on the existing IT infrastructure as huge amounts of data need to be processed and stored optimally. The lights need to be kept on 24/7.

Growing need for robust digital infrastructure

This increase in usage forced enterprises to take a relook at their digital infrastructure strategy. Captive data centres (DCs) are not sufficient to host digital content of this scale. Also, maintaining captive DCs proved too challenging for organisations because of the limited mobility and access issues during the pandemic. All this has resulted in increased demand for secure, scalable, and connected 3rd-party data centres across India.

Further, industry-friendly regulations, data localisation and protection norms, and the government’s digital initiatives and investments have all been implemented to lend a structural push to India’s data centre industry, which is poised to become a key pillar of our digital economy. The data centre capacity is expected to increase multi-fold in the next couple of years. The India data centre market is expected to grow at a compound annual growth rate (CAGR) of 15.07% during 2022-2027.

Given India’s strategic location in the South Asia region and availability of submarine cable landing infrastructure, land supply, vast green energy resources, skilled manpower and favourable regulations, the country has the potential to become an Asia-Pacific (APAC) data centre hub. We are already seeing large investment commitments from major domestic and international players and believe that this trend will only accelerate going forward.

Environmental sustainability at the core

We are witnessing an unprecedented consensus across the globe on the need for closer alignment between enterprises and individuals on climate change. Adoption of global best environmental, social, and governance (ESG) practices is topping the list of strategic business priorities to stay ahead of the curve.

Traditionally data centres have been seen as power guzzlers, consuming a huge amount of power to run mission-critical digital infrastructure. With the government granting ‘infrastructure’ status to data centres, data centre players can get long-term funding at a lower cost and expand a lot faster.

Globally, there has been a push by investors who prefer to invest in innovative green data centre technologies. There has also been a shift in consumer preferences towards greener and sustainable alternatives.

Adopting greener energy options and replacing outdated or inefficient technologies is not only helping to reduce the cost of running data centres but also to minimise the carbon emissions generated by data centres. At Nxtra, for example, we aim to reach net zero by 2031 and meet over 50% of our power input through renewable energy sources by FY23, thus contributing to Airtel's commitment to reduce its carbon footprint.

The way ahead

Rapid digitization of the Indian economy coupled with the lowest data tariffs in the world and affordable smartphones have fueled the demand for digital content and applications. The rising demand for digitalization has already fueled a clear transition of IT Infrastructure to cloud, a trend that will get further accentuated with the roll out of 5G, IoT infrastructure and Industry 4.0 applications.

5G specifically will bring edge alive and it will demand infrastructure be deployed as near to the customers as possible, to avail critical latency benefit. This will mean a huge surge in demand for network dense edge data centres. It will also enable very high data consumption across video, gaming, real time applications, IoT, virtual reality (VR) etc., which will in turn lead to exponential demand for hyperscale data centre facilities that are connected on a robust network fabric.

We see greater momentum towards building modern, software-controlled data centres through deployment of new-age digital technologies. With this, enterprises are racing toward the goal to simplify data centre processes and facilitate smarter and quicker decisions, reduce operational risks, and provide instant services and solutions to customers.

Rajesh Tapadia is CEO of Nxtra by Airtel. The opinions expressed by the author do not necessarily reflect the views of Business Insider India.