With the government laying more emphasis on self-reliance and data protection through data localisation, the demand for data centre outsourcing market in India is expected to grow by 25 per cent CAGR by 2023-24 to touch $5 billion.
While the Coronavirus situation may have got most economic activities to disrupt and most sectors looking at an uncertain future, there is one sector which is expected to generate huge investments, create new employment opportunities and grow consistently even post the COVID scenario. It is the business of data centre outsourcing. There are several reasons for the same. Firstly the lockdown has led to a series of activities which has resulted in the spurt in demand for data in India. People who want to use their time constructively have started using digital means to operate their business or profession. There are video meetings and webinars happening remotely where people are registering and getting connected. Schools are working online. There has been a 25 per cent increase in people getting hooked on to social media to get connected to their friends and relatives. Even offices are allowing people to work remotely from their homes.
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Need to safeguard data
The central government has also initiated the call for Atma Nirbhar Bharat or self- reliant India, where emphases would be laid on localisation. This also includes data and privacy protection of Indian citizens against any infringement by foreign authorities. There are several models of mobile phones which are available very cheap in India add to it the more affordable data connection.
This has resulted in a boost not only in urban but even in rural areas of India. According to the data by the Internet & Mobile Association of India (IAMAI), there has been an increase to the tune of 30 million users. Also during the first week of the lockdown, there was a 13 per cent increase in the internet data usage stated the report by the telecom ministry which is due to everyone working from home, live streaming of content, and accessing various social media platforms.
The coronavirus lockdown has accentuated the usage of data and has increased the demand for bandwidth as well as storage capacities. India is the second-largest data growing digital economy in the world. By the end of the year 2025, there will be almost 850 million smartphone users and 200 million Smart TVs consumers in India and will be collectively consuming more than five hours of video data per device per day.
With a constant increase in data usage, so are their storage requirements. There has been a massive increase in the data being generated both by the business enterprises and consumers. This is where the utility of the data centre for the storage of data, thus providing optimum endurance for executing a particular process comes in picture.
As consumers use more and more data, the demand for data centres also increases.
How does the data centre operate?
A data centre hosts physical infrastructure at secured facilities that house a series of computer networks that remotely store, process, and disseminates information and data organised around a business entity. For several businesses, setting up a dedicated data centre is not feasible if you factor in the costs of setting up the infrastructure. By outsourcing your data centre, you can get the facilities at a fraction of the costs with several added advantages like zero maintenance, scalability, and risk management.
The adoption of such cloud-based services is increasing on a global level as it removes the need for hardware and allows users to access computing resources anytime. The concept of the data centre is not new in India and has been there since early 2000. However, it was privatised only around the year 2005. You may recall that during the dotcom boom, there were hundreds of web portals being launched daily in India. Though the ownership was India, these companies needed a foreign host situated in a country like the USA. The reason was simple. At that time, the power supply infrastructure in India was not reliable, and these companies did not want to take a chance.
But now a lot of things have changed. The demand for data has gone up multiple folds, and government policies are also favourable. Several state governments have started offering huge incentives for companies wanting to set up data centres in their state. Plus most large companies setting up data centres have their dedicated power plant to take care of the issue of power fluctuations in the country.
Expected Investment Growth
It is estimated that an investment of around $10 billion is expected to happen in the data centre space in the near future. This is going to give a lot of boost to several allied industries. A sizable portion of this investment is going to happen in constructing the infrastructure. There will be thousands of new jobs created with the demand for IT specialists, engineers, and people in the ancillary services going up.
Secondly, the government’s decision laying emphasis on the localisation of data storage and preventing it from going outside the country is a huge step which would boost the data centre development in the country. A report by the AIMA estimates that through greater penetration of digital technologies in India and greater openness to data flows could result in a fourteen-fold increase in value to India’s domestic sectors and will touch a figure of $512 billion by 2030. Though the adoption and implementation of cloud applications in India are still at a small stage, its importance is only going to grow as many businesses are getting convinced that this is the only way forward to scale up their business growth.
Niranjan Hiranandani is the National President of ASSOCHAM. Views expressed are the author’s personal.