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Data centers in India: A new growth story

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By Ganesh Kothawade, Sr VP- Distribution Solution, Electrification Business, ABB India

The shift towards a digitally driven economy is now gaining pace as newer digital tools deliver efficiency and speed, while transforming entire business processes and the end-consumer experience. Data centers are behind this technological revolution we see unravelling, across the world. They are, in fact, at the heart of all modern digital tools and cloud-based services, making sure these are always-on, reliable and dependable for users. This, and the high demand for app-based services and OTT platforms have fuelled the rise of data centers in India.

India’s data centers are distributed between its top four metros, with Mumbai accounting for the majority share. The country contributes a meagre 1-2% to the global data center market but holds tremendous potential for growth. A recent JLL report estimates that the industry’s capacity could cross the 1 GW mark by 2023—double of what it was (499 MW) as of H1 2021. This could position India as an important hub for South-East Asia’s digital ecosystem.

Positive signs
India is now more cognizant of data protection and sovereignty, as digitalisation of transactions is growing and transcending geographical boundaries. The country’s regulatory environment has been supportive, as is evident from the government’s Digital India framework and the draft Data Protection Bill 2019, which proposes India’s first data localization structure for the entire economy.

The most recent classification of data centers in the infrastructure category in the 2022 Union Budget. This milestone opens up the capital-intensive industry to FDI, makes credit at low interest rates a possibility, and helps establish India as a new hot destination for data center activity in the region.

Global players too are investing in the India data center story, taking the concept beyond metro cities in the country. This trend promises to become a flood as demand for digital services grows and use of technologies such as 5G and IoT become more mainstream over the next couple of years.

Currently demand for data center hosting is being driven by up-and-coming industries such as, edtech, gaming, digital media and entertainment, and ecommerce. These newer demand sources have one thing in common – they are heavily cloud-dependent with on-demand business models and require consistent data center support.

The scenario is also similar for existing sectors such as manufacturing, banking, and financial services (BFSI), telecom, healthcare, and consumer retail. Additionally, several government services are being digitised for greater transparency, timeliness, and efficiency in their delivery of citizen-centric services.

Changing times
Typically, a traditional model data center can take anywhere between 18 to 24 months to build, and even longer, given the planning, design, and onsite fabrication. With the hyper-competitiveness of the market, and rise in demand, clients have multiple choices and, in most cases, may not be willing to wait this long.

This calls for a relook at conventional strategies and data center companies must be able to offer their customers the flexibility of a ‘pay-as-you-grow’ approach. This means going with contemporary modular and prefabricated solutions which can shorten build times significantly, promote scalability and generate revenues faster.

Along with this, there is a need to re-engineer service strategies to improve execution speed, efficiency, bring down the total cost of ownership for clients, and increase the reliability of data centers as a mission-critical and integral business resource. This would imply a greater degree of digitalisation in data center operations to ensure faster deployment of client solutions and using advanced online tools for swift and accurate configuration in projects.

Gearing up for new challenges
The widely accepted industry metric on energy efficiency – power usage effectiveness (PUE) – has been the guiding benchmark for data centers worldwide but it does have limitations. As the calls for reducing energy consumption and implementing greener approaches have gone up across industries, the data center business is no exception. With the adoption of new liquid cooling techniques, data center manufacturers hope to bring more ‘green’ solutions to the machines and address the industry’s need to balance its operating challenges with sustainable practices.

Designing data centers of the future will require a fresh approach in line with newer forms of data generation and storage, emerging technologies, and the need for more reliability and localisation. Few traditional performance parameters of data centers will continue to be as relevant as before, however, customers will demand greater flexibility, easier scalability, and cost-effectiveness to meet their data center needs.

While we can expect that the data centers of tomorrow will be built with an eye on quick upscaling capacity and with a sustainable energy design, the impact of 5G, AI and IoT, among others, could be game changing in ways we cannot predict accurately and adequately enough. Data center companies will therefore need to demonstrate added agility and innovation in how they respond to their industry’s unique challenges, while capitalising on the massive growth opportunities coming their way.

It is really great opportunity for technology providers to serve challenging demands of data centers with high adaptability, quick delivery of the solution and support with added services all along the journey of building these data centers. Organizations are also committed in providing the best global technology, which ramps up the efficiency, provides highly scalable options to growing load demands and helping to reduce carbon footprints.

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