Demand for hyperscale data centres has been witnessing a substantial increase in recent times as more businesses move their IT infrastructure to the cloud. Hyperscalers are recognising this increased demand and the potential that the data centre market holds in India.
With the introduction of the Personal Data Protection Bill, data localisation will soon become a reality in the country. To comply with the government’s guidelines, most businesses and global multinationals will need to host their data locally. Meanwhile, the adoption of public cloud infrastructure is also picking up pace. Public cloud service revenues in India are estimated to have totalled $2.4 billion in 2020, marking an increase of 24.3 per cent over 2018. Alongside, there has been a rise in application containers. A growing number of connected devices and the rapid adoption of the cloud, internet of things (IoT), big data analytics, mobile data, social media, online transactions (tax e-filing, internet banking, mobile payments, etc.) are leading to an explosive growth in data. This, in turn, is inviting more hyperscalers to India.
The size of the digital population in India is a huge driver for data centre demand. Digital data in the country was projected to reach about 2.3 million petabytes by 2021, which is twice as fast as the global rate. Meanwhile, Microsoft, Amazon Web Services (AWS), Google and Alibaba continue to expand their footprint in India. Companies such as Adani, CtrlS and Yotta are investing in the development of hyperscale Tier IV data centre facilities. These planned and ongoing investments are instilling confidence in new players looking to enter this space.
The key technology trends in this space are:
- Catering to increasing power density of facilities: Cooling and power infrastructure needs to support a rack power density that is considerably higher than that for enterprise requirements (computing rack capacity of 25 kW and above).
- Energy efficiency: Hyperscalers operate at a power usage effectiveness (PUE) factor that is 1.4 or less and requires technological innovations that can attain the required efficiency with a good payback period.
- Green power: The sustainability requirements of hyperscalers make it imperative to use clean energy in data centre operations. Data centres are shifting their focus to renewable energy sources for optimisation of power needs.
- Modular design: Hyperscalers seek mega facilities that ramp up over the contract period. Quick turnaround times for facilities, at various ramp-up capacities, require data centre developers to deploy innovative deployment strategies with modular implementation.
There are certain challenges that need to be addressed to accelerate growth in this sector. These include statutory and regulatory issues such as securing power through local government authorities. Acquiring sufficient landholdings for building hyperscale data centres is also challenging in dense city centres. These have to therefore be moved to designated areas on the outskirts of major markets. Further, operating and securing sufficient data centres for hyperscale-grade facilities is difficult and time-consuming. Moreover, recruitment of professionals such as critical system technicians, power system technicians and analysts, facilities control technicians, robotics technicians and project managers is another challenge that data centre companies face.
Current footprint and upcoming opportunities
Hyperscalers accounted for over 35 per cent of the existing 360 MW co-location demand served in India in 2020. Of the total 340 MW hyperscaler demand generated in India in 2020, 36 per cent (approximately 120 MW) is served from within India. The data centre demand generated by hyperscaler activity in India is set to grow at 25 per cent over the next 10 years to reach 3,200 MW. Around 48 per cent of this demand is expected to be served from within India itself. Further, over 60 per cent of the hyperscaler demand generated over the next 10 years will be from the infrastructure-as-a-service (IaaS) segment, which has a growth projection of 29 per cent over this period. The IaaS segment would be followed by the platform-as-a-service and software-as-a-service segments, growing at a compound annual growth rate of over 20 per cent.
The hyperscale demand served in India is expected to grow rapidly throughout the forecast period, driven by increased cloud migration and data localisation legislation. In terms of regions, Mumbai and Chennai are the traditional entry point markets for hyperscalers because of their subsea cable access. Meanwhile, as they continue to expand, hyperscalers have moved closer to their customers in New Delhi, Bengaluru, Hyderabad and Pune.
Net, net, the growing adoption of the technology-driven business model will continue generating demand for multitenant data centres. Going forward, there will be a surge in hyperscale data centres, opening up a plethora of opportunities for both domestic and international data centre operators.
Based on a presentation by Vinod Javur, Chief Operating Officer, Data Centres, Adani Enterprises, at a recent tele.net conference