Virtualization and Cloud will pave way for next generation data center services adoption in India

Cloud Computing, though at a nascent stage
in India, is showing signs of being a disruptive model for the consumption of
IT in the coming few years. As the adoption of Cloud and Virtualization (which
is a precursor to the former) rises in the future, there would be a paradigm
shift in data center presence in the Indian market. Organizations, especially
from the small and medium segment, would bypass the establishment of data
centres and adopt Infrastructure-as-a-Service.


The other significant trend would be
cloudification of the data center facilities of the third party data center
services providers to enjoy the twin benefits of cost optimization and provision
of cloud services to cater to the demand for Cloud.

Key Highlights:

– 40 percent captive data centres expected
to be due for technology refresh or consideration of subscribing to third-party
data centre services

– Service-level concerns could influence
CIO decision making when selecting partners, facilities

– Stage set for play of jumbo third-party
facilities but vanilla offerings under rising pricing pressure

– Third-party landscape still dominated by
telcos but challengers arrive on block

– Third-party data centre services market
clocked revenue of USD 360M for the 12-month period ended March 2011

“Adoption of third-party data centre
services has been on the rise by large as well as medium businesses, driven
both by the need to cut costs as well as to lower the risks associated with
investing in data centre equipment and technologies that face ever shortening
refresh cycles,” said Jaideep Mehta, country manager, IDC India.

“While a majority of the third-party
data centre services revenues come from colocation and hosting services, the
managed services component is steadily rising. The beginning of a major shift,
beyond the vanilla co-lo and hosting play, however, is still two-three years
away and would depend on the pace at which cloud-based models and offerings are
able to mature in India,” Jaideep added.

The key verticals for third-party services
have been Manufacturing and IT/ITeS.  A growing need to focus on core
business; lack and retention of skilled human resources for in-house management
of data centre operations and rising power, cooling and real estate costs have
remained the major drivers for adoption of third-party DC services.

The third-party DC services market in India
is estimated to reach USD 671M by the end of 2012, registering an annual growth
of around 36.5 percent.

While captive data centres in general offer
a rapidly growing business opportunity, Manufacturing, BFSI and IT & ITeS
constitute the block of more attractive verticals.  Further, the
expenditure by businesses on their captive data centre build-outs and
operations was $1389 million in 2010, and would reach USD 1937M by the end of
2012, at an average year-on-year growth rate of 18.1 percent.

With a slew of investments in the
e-governance, UIDAI, and state data centre projects, Government would be a
vertical to watch for, with spend on data centre build-outs expected to remain
unabated for the coming three to five years, both at central and state
government levels.

Around 40 percent organizations have data
centres which have existed for 5 years or more, meaning thereby that
investments in technology refresh or consideration of subscribing to
third-party data centre services would be due in the near future.

In the third-party data centre segment,
telcos continued to hold the largest market share with Reliance Communications
being the market leader (in revenue terms), followed by Tata Communications.
Among the pure-play service providers, Netmagic has further consolidated
its position, with a healthy and growing focus on managed services. Going
forward, Tulip Telecom would be a player to watch form as it builds its mega
data centre facility of 900,000 sq. ft. in Bangalore.

By IDC India

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