Have an insight of the cast

Or at least India’s realtors think so. Gujarat-based Adani Group plans to invest Rs 70,000 crore ($9.83 billion) to set up 3GW-powered data centers alongside captive solar plants with a 5GW capacity. There are also murmurs of Mumbai-headquartered conglomerate Godrej wading into the data center business.

International players, such as Ascendas Swingbridge (now CapitaLand) and Colt DCS, have already announced their intent to invest in and create Colocation (COLO), spaces. These are concrete structures to house data centers, with stable, redundant power supply, cooling, and other supporting services.

Exploration of the options

According to industry sources, US-based data center company Equinix is exploring various options to enter the Indian market. “They tried to procure a piece of land but were overwhelmed with regulations. Then there were talks of acquiring [data center operator] CtrlS, but the deal didn’t go through,” says an industry official aware of the developments.

The existing players—Netmagic, Ctrl S, Nxtra Data, Sify, STT, etc.—are scaling up as well, adding new data centers on a war footing.

Data centers are nothing new. Several Indian IT and telecom companies have dabbled in it over the years. Meanwhile, a growing contingent of enterprises have stirred the cloud computing pot for the last decade or so, concerns around security, ownership, etc., notwithstanding. Over the years, the market has matured, with businesses more confident about migrating from in-house data centers to the cloud.

For the longest time, the market primarily was driven by demand from enterprises. Alongside this, two more things happened. E-commerce companies scaled rapidly, with cloud services a value proposition for them. The startup ecosystem also boomed, with cloud naturally being their first choice. It was incremental growth of 30% in the early years—between 2006 and 2014—says Nitin Mishra, senior vice president of products and services at Netmagic.

All of that, however, changed in 2014.

The advent of the hyperscalers

That’s when Microsoft and Amazon started buying rack servers from existing COLO providers like Tata Communications, Sify, etc. The arrival of these internet giants upped the ante in the Indian data center and cloud market. At least one of the hyperscalers (internet giants such as Microsoft, Google, Amazon, Apple, Facebook, who require large scale data centers), experts believe, want to make India a regional hub for a whole host of cloud services they offer.

With Singapore—which has the most data centers, according to the Cushman & Wakefield rankings—saturating, global hyperscalers and COLO players are looking at Indonesia, Malaysia, and India as alternatives.

In the last three to four years, the demand has shot up, says Mishra. “The next phase of growth (driven by internet giants) you are seeing is 10X,” he explains. Unlike enterprises, which consume less space—the largest enterprises would need tens or hundreds of racks—hyperscalers (Google, Amazon Web Services (AWS), Microsoft, etc) require thousands of racks.

Before 2014, industry veterans say, companies built data centers with power consumption capacities of 4-5MW. Only a select few, such as Tata Communications, ventured to build data centers with a 10MW capacity. And selling out rack spaces would still take 4-5 years.

After 2014

But by 2015, when Netmagic launched its first 22MW hyperscale data center in Mumbai, the business target set for a year was met in three quarters. “We realized we don’t have any inventory to sell,” says an executive who worked with Netmagic at the time.

“If you have to run a good e-commerce site, for example, you need to have a big data center infrastructure, which means large buildings, a good amount of power, cooling, and skillset to run that center on top of good network and bandwidth,”

— SUNIL GUPTA, YOTTA CEO

At present, Netmagic’s facilities which will go live next year are almost booked already, says Mishra. It has data centers with 150-200MW power consumption capacity—the largest in the country, accounting for 12-15% of India’s total data center footprint. [A 100MW data center equals ~10,000 server racks.]

Primarily, we have been adding 30-40MW every year. It may slightly accelerate after two years depending on how the competitive environment works out, says Mishra.

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