India is witnessing a surge in data consumption with more internet users now than ever before. This is expected to grow further in the times to come as technologies such as 5G, artificial intelligence (AI), internet of things (IoT) and blockchain make inroads into all sectors. This rise in data traffic has provided an impetus to the data centre market, with enterprises turning to data centres to host mission-critical applications. According to a recent report, the Indian data centre market size will reach $1.5 billion by 2022. This will be driven by increasing data storage demands from sectors such as banking, financial services and insurance (BFSI), manufacturing, retail, telecom and IT.
The outbreak of the Covid-19 pandemic has provided a further impetus to the growing data centre market, as the shift to a work-from-home arrangement and the need to ensure business continuity prompted government and private enterprises to turn to data centres. Demand for these data centres is growing among enterprises across sectors.
A look at the key tech trends dominating the data centre space, and the impact of Covid-19…
Key tech trends
Data centres are witnessing a series of technology advancements. Emerging technologies such as AI, IoT, cloud computing and edge computing are transforming the operational capacity of data centres and making them more agile, secure and efficient. For instance, IoT enables a data centre to become more flexible by providing the automation it needs. With the help of algorithmically managed IoT devices, everyday tasks at the data centre, such as patching, monitoring, updating, scheduling and configuration, can all be managed remotely. Similarly, with the help of AI, data centre operators can improve monitoring of operations. AI complements security incidents and event management systems, as it can analyse incidents and inputs from multiple systems. It then devises an appropriate incident response system. Of late, cloud computing has also emerged as one of the most cost-effective technologies for data centres, as it has eased the pressure off traditional data centres by providing virtual infrastructure for off-premises computing.
Uptake across sectors
Enterprises across industries are fast adopting the public cloud for various workloads. To this end, all hyperscale cloud providers are setting up availability zones, which has led to a tremendous demand for data centres. For instance, in the BFSI sector, companies have started leveraging the benefits of edge data centres. With the help of these centres, data in this sector is processed near the generation points. This minimises the requirement of transferring data to a public cloud, making it more secure. Containerised data centres are well suited to address the needs of the banking industry.
In the retail sector too, the demand for data centres has been gaining traction on the back of point-of-sale systems, online payments, and e-commerce. Enterprises in the retail sector have been making optimum use of data centre solutions to enhance their business operations. Likewise, with the help of industrial IoT, data in the manufacturing sector is collected at the end points, such as sensors and actuators that monitor machines in real time. To this end, data centres are being increasingly used to consolidate the data generated from these operations and integrate diverse manufacturing services.
Growing impetus on green data centres
The surge in data demand has put significant pressure on modern-day data centres to deliver higher capacities. As a result, data centres are guzzling massive amounts of energy. Power is, in fact, one of the key components of a data centre. Recent market studies suggest that industrial data centres are some of the biggest consumers of electricity. The growing energy consumption of data centres is rapidly adding to the global carbon footprint. As per industry estimates, the entire information and communications technology (ICT) ecosystem accounts for about 2 per cent of the global carbon emissions, of which data centres contribute about 0.3 per cent. Analysts predict that ICT could potentially account for over 20 per cent of the total global electricity use over the next eight to nine years, and data centres are expected to contribute over one-third of this.
Since the power requirement of data centres is expected to increase manyfold in the near future, the industry has started taking initiatives to make data centres energy efficient and environmentally friendly. This has led to the emergence of the concept of green data centres. A green data centre deploys environment-friendly solutions within its infrastructure. It stores, manages and disseminates data like any other data centre, but ensures a lower carbon footprint. All its systems, mechanical and electrical, are designed with the goal of conserving energy. Another key aspect of a green data centre is the continuous monitoring of all applications. This enables the data centre to use power efficiently. It can transfer or redistribute energy across various applications, depending on the requirements. This helps reduce capex significantly. Green data centres also address the problem of dead server space prevalent in conventional data centres, thus reducing the energy consumption and cost.
A key growth avenue for both telcos and towercos is edge data centres, which are slowly gaining traction owing to the proliferation of several low latency and high throughput applications that require edge computing technology. These edge data centres are small, regional, cost-effective, automated, micro-modular data sites that can power high speed computing.
All three private telcos in the country are taking on the edge opportunity. Vodafone Idea is reported to have the largest number of edge cloud deployments in the country. The operator’s enterprise arm is expanding its edge data centre outreach to 200 more locations. Recently, the operator launched a new platform under its Open Universal Hybrid Cloud, powered by IBM and Red Hat. The platform enables new distributed edge computing capabilities that can seamlessly blend network and IT functions. Meanwhile, Airtel’s data centre arm Nxtra is operating more than 120 edge data centres and providing customers with co-location services, cloud infrastructure, managed hosting, data backup, disaster recovery, and remote infrastructure management facilities. Likewise, Reliance Jio is also betting big on edge computing for seamless connectivity. The operator has partnered with Cisco to deploy multi-access edge computing for optimisation and to enhance video experience over the network, by developing a mobile content delivery network.
Edge data centres also present an attractive revenue generating opportunity for towercos. Towercos have certain strengths, such as a vast fibre footprint, which gives them an edge in the data centre business. Fibre connectivity is a critical component of these centres. Thus, the fibre infrastructure owned by towercos can be used to establish data centres. Further, telecom tower sites have steady power supply, ready access to fibre backhaul connectivity, and the requisite real estate. They are also located at the network edge. Most of these towers have enough space at their base to install data centres. By deploying edge data centres at their sites, towercos can onboard customers with stringent latency requirements, such as content delivery network providers and cloud providers, which support edge-specific applications.
Impact of Covid-19
The onset of the Covid-19 pandemic deeply impacted the data centre industry as most organisations shifted to the digital mode of working, resulting in a surge in demand for data centre services. Immediately after India went into lockdown due to Covid-19, there was a 25-35 per cent increase in data centre capacity usage, as companies began to upgrade their digital infrastructure to cope with the new work culture.
The way forward
Since the Covid-19 pandemic has significantly altered work scenarios and created a new normal, the need for data storage is likely to grow stronger in the coming years, driving up demand for data centres. Going forward, CRISIL predicts that the Indian data centre industry will witness an annual growth rate of 25-30 per cent, to reach $4.5 billion-$5 billion by 2025.
Mumbai is expected to see the highest capacity addition, as it continues to be the preferred choice for large cloud players because of its infrastructure advantage. Chennai is also proving to be an attractive destination due to the presence of submarine cable landing stations and low development costs. Further, according to CBRE, cities such as Kolkata, Pune, Gurugram, Kochi and Jaipur are likely to witness the emergence of edge data centres during 2021-23 owing to their ability to service specific geographic zones.
By Diksha Sharma