Colocation’s new frontier: Hyper-customisation for diverse vertical needs
India’s colocation market is undergoing a fundamental shift. Once focused on providing secure space, power, and connectivity, colocation is now evolving into a nuanced, sector-aware infrastructure layer. As enterprises accelerate digital transformation, colocation is no longer judged solely on uptime or square footage. Increasingly, it is being evaluated on how precisely it aligns with the operational, regulatory, and performance realities of specific verticals.
According to a recent report, India’s total data centre capacity surpassed approximately 1.5 GW as of the first nine months of 2025, with 260 MW of new supply added, and nearly 90% concentrated in Mumbai, Chennai, Delhi-NCR, and Bengaluru. This underscores the rapid growth of digital infrastructure.
This transition marks the rise of hyper-customisation in colocation, where infrastructure is purpose-built to meet the needs of fintech, gaming, healthcare, media, and other data-intensive sectors. In this new phase, colocation is emerging not as a passive hosting environment, but as a strategic enabler of business outcomes.
From standardised infrastructure to sector-specific design
For much of its evolution, colocation followed a largely uniform template. Enterprises sought facilities that could host servers reliably, with predictable power availability and basic redundancy. While this model supported early outsourcing and cloud adoption, it’s now insufficient for today’s workloads.
Modern digital applications are deeply shaped by sector-specific demands. Financial services require stringent compliance controls, auditability, and low-latency processing. Gaming demands ultra-low latency and high-density compute. Healthcare must balance data localisation mandates with privacy, while media platforms demand elastic capacity and high-throughput connectivity.
AI and GPU workloads, as well as hybrid cloud strategies, are accelerating this trend. Enterprises colocate latency-sensitive or high-density tasks while keeping elastic workloads in the cloud.
These divergent needs are forcing colocation providers to move away from one-size-fits-all designs towards infrastructure tailored to each industry’s operational context.
Power density and cooling: One size no longer fits all
One of the most visible dimensions of hyper-customisation lies in power density and cooling architecture. As enterprises deploy high-performance computing, AI-driven analytics, and GPU-intensive workloads, traditional power configurations are often inadequate.
Different verticals exhibit distinct consumption patterns. A fintech risk analytics platform may require sustained high-density compute, while a media company might see sharp spikes during live events or content releases. Supporting such diversity requires modular power systems, flexible redundancy, and cooling that adapts to workload behaviour.
This has led to growing adoption of hybrid cooling approaches, including liquid-ready designs, hot-aisle containment, and precision cooling, allowing colocation environments to scale efficiently without overprovisioning. The emphasis is shifting from maximum capacity to optimised performance aligned with real usage.
Sustainability expectations are also shaping these parameters, with enterprises prioritising lower PUE, renewable energy, and readiness for liquid cooling in procurement. AI density makes this increasingly essential.
Network architecture and latency optimisation
Latency has become a defining metric for many digital services where even marginal delays can result in lost revenue or degraded user experience.
It is increasing carrier diversity at core hubs but also leading to the rise of edge colocation deployments, placing infrastructure closer to end users to enhance support for gaming, 5G, IoT, and real-time workloads.
Hyper-customised colocation increasingly incorporates tailored network routing, proximity-based deployments, and carrier diversity designed around application behaviour rather than generic connectivity. Enterprises are looking for facilities that offer direct access to multiple network paths, cloud on-ramps, and exchange points, enabling them to architect low-latency ecosystems that span users, partners, and platforms.
This shift underscores a broader change: colocation is no longer just about where data resides but about how efficiently it moves.
Compliance, security, and governance as design principles
Regulatory complexity is another driver of vertical-specific colocation. Industries such as BFSI and healthcare operate under overlapping frameworks covering data protection, audit trails, resilience, and sovereignty. Compliance is now embedded into facility design, not added after deployment.
In India, changing data localisation regulations are significantly impacting hosting choices, leading to infrastructure being prepared for compliance rather than being retrofitted afterwards.
Hyper-customised colocation environments integrate physical security controls, access governance, logging mechanisms, and operational segregation aligned with sectoral norms. For regulated enterprises, this reduces compliance friction and enables faster scaling without repeatedly revalidating infrastructure foundations.
Importantly, this approach also reflects a growing expectation from regulators themselves: that digital infrastructure should be resilient, transparent, and auditable by design.
Redefining the role of the colocation provider
As customisation deepens, the role of the colocation provider is expanding. Providers are no longer simply facility operators; they are infrastructure partners who understand industry workflows and risk.
This requires closer collaboration with enterprises during design and deployment, as well as ongoing adaptability as AI workloads evolve. Value-added services, managed security, hybrid cloud onboarding, workload migration, and AI ops support are now embedded in the colocation portfolio instead of optional extras.
In this context, colocation becomes a platform for long-term digital strategy rather than a tactical real estate decision.
Looking ahead: Colocation as a strategic enabler
India’s digital economy is entering a phase in which competitiveness is directly impacted by infrastructure choices. As data volumes grow, applications become more real-time, and regulation tightens, enterprises will increasingly seek colocation environments that reflect their specific operational realities.
Hyper-customisation represents the next frontier of this evolution. By aligning power, cooling, network, and security with sectoral needs, colocation can support innovation while ensuring resilience and compliance.
The future of colocation lies not in scale alone, but in relevance, delivering infrastructure that is as specialised and dynamic as the industries it serves. In doing so, colocation will continue its transition from a supporting utility to a foundational pillar of digital transformation.
