India Data Center Market 2012 – Cost Savings & Various Service Offerings

The Indian Data Center market is seeing significant growth in demand as there is not only significant increase in adoption by governments both at the center and state levels where they are aggressively building data centers to utilize cloud computing to store data and provide services to citizens more efficiently but also from the business organizations who have realized that there are significant benefits for them in terms of cost savings and increased focus on their core businesses as hosting a company’s IT infrastructure in a managed data center by a third party service provider and in a centralized rather than distributed manner, works out to be more cost-effective in the long run. In case of captive data centers, huge costs associated with real estate, IT infrastructure, and the manpower to manage it will have a direct impact on the company profitability. Data centers services providers invest hugely (in Crores of rupees) in power and cooling infrastructure such as chiller units, generators, batteries and UPS units, power distribution units (PDUs) and specialized computer room air conditioning units (CRAC) and businesses that are looking to use the data centers services providers can benefit from the economies of scale and shared services model. Data center providers are currently offering infrastructure services along with specialized services (over the cloud) such as security, digital video surveillance and storage and data centers are partnering with vendors and solution providers for offering such services.

Managed hosting services is another key driver of growth in India in which data center provider will lease an entire server to one customer who has full control over the leased server and administration (monitoring, updates, application management, etc.) are offered as add-on services. This is cheaper when compared to deploying a server in-house, as it is costly in terms of power and cooling costs and IT staff costs. Managed services, which include cloud computing solutions, managed ATM services and video conference solutions and Network leases are usually a 12-month contract renewed every year. But for managed service contracts, customers prefer a three or a five-year contract, as they want certainty. Collocation (colo or coloc) is a data center service in which customers can place their own server in a data center and use shared and redundant resources like power and HVAC which is very attractive for the customers as they need not have invest upfront  for such resources. Data centers also offer locked cages for customer servers, monitored by IP cameras at the customer’s end and customers can also visit the site and do server administration from a cubicle. The data center colocation and hosting market in India is estimated to reach $609.1 million in 2012, according to Gartner, Inc. The market will experience consistent growth through 2016 when the market is forecast to total $1.3 billion.

Data center-in- Data center (DiD in which data centers host a major IT service provider like HP, IBM or Dell and the service provider will in turn host infrastructure for its own customers which helps  service provider to focus on its core expertise (applications and services) without making upfront and expensive investments in power and cooling. India players are already hosting some of the major IT service providers and are also opening data centers overseas and are actively looking to go global. Small and Medium businesses are also increasing the adoption and they have significant cost and resource savings by hosting their IT on third party data centers and which is further fuelling demand in India market. The various service offerings by the data centers services providers and the significant cost benefits and increased focus on core business processes are expected to fuel the data center market in India in the next five years and large players are investing heavily in setting up new data centers and increasing capacities.