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Information Hubs: Data centres emerge as the ideal solution for data management and analysis

June 24, 2019
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The exponential growth in data volumes has brought data management, storage and security services to the fore. Managing data growth, which includes both data storage analysis, is proving to be a challenge for the government as well as private entities. They are increasingly turning to data centres for achieving cost and operational efficiencies, providing a fillip to the Indian data centre market.

Data centres enable both private as well as public enterprises to host a number of mission-critical applications. These applications are powered by software-defined tools and cloud-based infrastructure, which ensure 24x7 data availability. Today, data centres have evolved into smart data centres that leverage cutting-edge technologies such as internet of things (IoT) and artificial intelligence (AI) to enable businesses to manage core operations and expand their capabilities. Hyperscale data centres, which work with hundreds of thousands of individual servers, which are made to operate together via a high speed network, have also started gaining traction in India. However, addressing cybersecurity issues is paramount to ensure unrestrained growth in the data centre space.

tele.net presents an overview of the data centre market in India and the emerging opportunities in this space…

Market overview

The Indian data centre market has been experiencing steady growth over the past few years on the back of increasing data generation. The proliferation of over-the-top applications, the e-commerce boom and rapid digitalisation under the government’s Digital India programme have all contributed to this growth. According to a study by Colliers International, the Indian data centre market is poised to reach a $7 billion valuation in the next two years from its current valuation of $4.9 billion, registering a growth rate of 25 per cent.

There are two types of data centres. Captive data centres, which are operated and managed by organisations themselves, account for a roughly 40 per cent share in the Indian data centre space. Third-party data centres account for the remaining share. Organisations lease space and hosting services from these data centres.

As for participants, the market comprises a mix of IT, non-IT and telecom companies. These are classified as hosting providers (which offer a comprehensive portfolio of services but do not own bandwidth), space wholesalers (which build and sell shell space), telecom operators (which provide colocation and hosting services, and also serve as platform providers), facilities management players (which own real estate and lease facilities with power, cooling, security and safety arrangements) and outsourcers (which own data centres, and offer services such as infrastructure outsourcing, business continuity and data resiliency).

Some of the key players in the Indian data centre market are CtrlS, Sify Technologies, Tata Communications, Nxtra Data (Bharti Airtel’s wholly owned unit), GPX Global Systems, Pi data centres, ESDS and Netmagic. Netmagic operates nine data centres in total, of which five are in Mumbai, two in Bangaluru, and one each in Chennai and Noida. CtrlS has seven data centre facilities across Mumbai, Bengaluru, Noida, Chennai and Hyderabad, and Sify has six concurrently maintainable data centres across Chennai, Mumbai, Delhi and Bengaluru. These companies are now focusing on stepping up their investments in the data centre space and have plans to expand their data centre infrastructure in the coming years.

The Indian data centre space is witnessing significant activity with e-commerce giants, telecom operators and government enterprises setting up their own data centre facilities. In a bid to strengthen its technology backbone, Flipkart has launched a new green data centre in Hyderabad. It has been built in partnership with CtrlS and is Flipkart’s second data centre in India. Among government entities, the Delhi Jal Board has established a data centre to monitor real-time data of over 3,000 strategic distribution channels along its supply network while the National Informatics Centre has launched four data centres to monitor the data generated by the government’s digital projects. Further, the National Payments Corporation of India has recently announced plans to set up a data centre in Hyderabad to manage the growth in the digital payments space. As for telecom operators, Reliance Jio is at advanced stages of setting up its data centre in West Bengal. It is being built at an investment of around Rs 10 billion. Moreover, Bharti Airtel’s unit Nxtra data is planning to set up 10 new data centres with four being planned in Pune, Chennai, Mumbai and Kolkata.

Emerging trends

The key trends driving the growth of the data centre market in India are:

Data localisation: The government’s data localisation mandate has prompted multinational organisations to store data of Indian customers within the country. As a result, multinational organisations have started establishing their data centres in the country. This has also opened up immense opportunities for both domestic and foreign players operating in the data centre, data analytics and data processing space. For instance, Singapore-based Ascendas-Singbridge is reportedly investing $1 billion in setting up data centre facilities in Chennai, Mumbai and Hyderabad. According to industry experts, saving data in a data centre located in India leads to around 80 per cent reduction in manpower, real estate and bandwidth costs as compared to using a top-tier data centre in the US or Singapore.

Cloud computing and virtualisation: Another factor driving the growth of the data centre market in India is the increasing adoption of cloud-based services and virtualisation. Data centres that provide cloud hosting services such as infrastructure-as-a-service and platform-as-a-service are finding many takers among enterprises. Further, virtualisation of enterprise servers has resulted in cost savings and flexibility. Virtualisation enables organisations to make more efficient use of the data centre’s hardware. Multinational cloud providers like Alibaba Cloud, Microsoft, Google Cloud, IBM and Amazon have started strengthening their data centre infrastructure to leverage opportunities in the cloud services business. Alibaba Cloud operates two data centres in India, Microsoft operates three data centres, while IBM and Google Cloud operate one data centre each. Recently, Amazon announced its plans to invest Rs 13.8 billion to strengthen its data centre business in India. Meanwhile, new players like India-based RackBank and US-based Oracle are set to foray into the Indian data centre space to leverage the cloud opportunity. RackBank has committed an investment of Rs 10 billion to set up a data centre at the Infopark, Cherthala, in Kerala, while Oracle is set to launch its first data centre in Mumbai by the end of 2019.

Smart data centres: Data centres need to evolve to support the deployment of technologies that are set to transform the data generation process such as IoT. This calls for the establishment of smart data centres, which use modern technologies like AI and automation to process data and provide valuable insights to businesses for enhancing their decision-making. These data centres help in making IT processes more agile by automating them and centralising control. In this sense, smart data centres can help reduce the gaps in IT facilities and infrastructure.

Hyperscale data centres: Hyperscale data centres are based on architecture that expands and contracts with the changing needs of the business. They allow seamless scalability and offer flexible memory, networking and storage capabilities. The key feature of these new-age data centres is scalability, which works in two ways. Horizontal scaling or scaling out, which means increasing the number of machines working in the network, and vertical scaling or scaling up, which means adding additional power to the machines already in service. Scaling leads to the formation of data centres that are able to meet expectations, and improve uptime and load time for end users. Hyperscale data centres are slowly gaining traction in India. For instance, CtrlS is investing Rs 20 billion for setting up the world’s largest Tier-IV data centre footprint in India. This will comprise three new data centres including a 150 MW hyperscale data centre in Hyderabad spread across 2 million square feet, a 100 MW facility in Mumbai and a 70 MW set-up in Chennai, both spread over around a million square feet each. Further, UK-based Colt Data Centre Services is planning to set up a 100 MW hyperscale data centre facility in Mumbai.

Connectivity needs and solutions

The key functions of a data centre include centralising and consolidating IT resources, housing network operations, facilitating e-business and providing uninterrupted service to mission-critical data processing operations. This requires adequate connectivity both within and among data centres. In fact, speed and reliability are two primary concerns for a data centre. While speed entails moving data as fast as possible at the lowest latency, reliability is ensured by designing devices with redundancy, ensuring backups for storage, providing uninterrupted power supply and reducing heat generation.

All these requirements can be satisfactorily met by fibre networks. The data centre space has therefore witnessed an upsurge in optic fibre cabling in the past few years. The deployment of fibre allows high density data centre cabling, can support higher data rates and enable error-free transmission over longer distances. Further, fibre installations are up to 75 per cent faster, resulting in considerable time and cost savings for data centre developers, operators and contractors.

Data centres have a choice between multimode fibre and single-mode fibre (SMF). Given the shorter distances and slower data rates (below 25 Gbps) of earlier data centre architectures, using multimode fibre was considered financially feasible. Also, the comparatively high cost of pluggable optics discouraged data centre operators from using SMF. Currently, three factors are favouring single-mode fibre. These are the increase in data rates from 10 Gbps to 40 Gbps and beyond, increase in intra-data centre rates, and reduction in the cost of serial optics with the adoption of the silicon photonics manufacturing process.

Challenges and future outlook

Despite significant growth, data protection and security have remained critical issues in the data centre space. Data centres are particularly vulnerable to cybersecurity attacks given the vast amount of valuable data they contain. Thus, cybersecurity measures need to be taken to ensure physical security of the data centre building and its components such as restricting access to servers that contain confidential data; using a comprehensive data recovery and backup mechanism and data encryption while transferring files; and adopting security solutions that protect all virtual and physical server environments and infrastructure as well as all web-based applications. Further, issues such as unreliable power supply, inconsistent internet connectivity, inadequate infrastructure, and limited bandwidth and optic fibre network continue to hamper the growth of the market. Addressing these challenges will be crucial for companies to run their data centres in an efficient manner.

Challenges notwithstanding, India is poised to carve a niche for itself in the global data centre space. It has already become the second-fastest growing data centre market in the Asia-Pacific (APAC) region. In the next few years, industry growth estimates predict that India’s share in the global as well as APAC data centre markets will increase to 4.5 per cent and 12 per cent respectively. Increasing interest shown by multinational organisations, rising foreign investments and strong capacity enhancement plans of service providers will drive this growth. The government’s data localisation mandate will also prove to be a game changer, giving a major impetus to the Indian data centre market.

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