The Opportunity for Local Datacenters in India

Last year, two big announcements showed the world why India is now being seriously considered as a market for building local datacenters. IBM or Big Blue, as it is popularly known, announced that it was setting up its first cloud datacenter in India to gain a bigger share of the exploding cloud computing market in the country. The firm announced that it had built a 30,000 sq ft datacenter facility in Airoli, Mumbai. Similarly, Microsoft announced that it will set up local datacenters in India by the end of 2015.

Even as the adoption of cloud computing rises exponentially, many firms, especially those who have to adhere to regulatory requirements, are unable to put their data on the cloud simply because they need to host their data locally. As most public service providers have servers hosted abroad, firms in sectors like banking, telecom, and government are unable to host their data on public clouds.

Till now, global players had a wait and watch attitude. But now, with a government focused on going digital in a big way, and an accompanying boom in smartphones and associated sectors like eCommerce, global players like Microsoft and IBM are realizing the importance of setting up a local datacenter.

Studies by independent research firms like Gartner corroborate the bullishness in this sector. Gartner believes that India will be the second largest market for datacenter infrastructure and the second fastest growing market in Asia-Pacific in 2015.

Commenting on the potential of local datacenters, Tyler Bryson, General Manager–Marketing and Operations, Microsoft India says, “We, at Microsoft, believe that there is a huge growth potential for cloud services and local datacenters in India. The key architects of this growth are digital explosion, advent of smartphones, advanced and rich content delivery platforms, high-speed data connections, exponential growth in the adoption of eCommerce, increasing Internet penetration, and reiterated focus on e-governance. Aligned with industry predictions, Microsoft, with a diverse range of cloud offerings, is well-positioned to address this market by offering services from local datacenters, catering to the requirements of industry sections which are under served for cloud services.”

Local data centers will be a game changer in terms of compliance and cost. This will also help in addressing many local breach cases as there will be more accountability from the service provider with respect to compliance

- Mani Kant Singh R CIO, Orbis Financial

COMPLIANCE BOOST FOR LOCAL DATA CENTERS

By opening local data centers, market players like IBM and Microsoft will be able to tap into the BFSI, telecom, and government sectors, which have been hesitant to move into the cloud due to regulatory requirements.

“Banks can migrate their data centers and their business applications like core banking systems, customer relationship, collaboration tools, office automation, and many more to the cloud allowing them to focus on their core business of banking and release prime real estate which today hosts their data centers. Transaction costs for digital banking will be a pittance compared to brick and mortar banking and it will make banks customer focused, agile, secure, and cost effective,” opines LS Subramanian, Founder, NISE, and a renowned cloud evangelist in India.

Subramanian believes that insurance businesses which have large volumes of data will also benefit hugely as they will have an agile and reliable platform to effectively take their business national and reach to customers on a pan-India basis. “Indian exchanges which spend large amounts of money and resources to keep their lights on in their datacenters can breathe easy once they migrate to a local cloud. Additionally, commodity markets will be able to handle large volumes and support more market players efficiently and at lower costs,” he says.

By going in for a local data center, Indian organizations can reduce their costs significantly. Additionally, local data centers can take the specific requirements of Indian organizations into account

- Suresh Shanmugam Head-BITS, Mahindra & Mahindra Financial Services.

Every sector that was hesitant to host data outside the country’s borders due to regulations will benefit from local datacenters. Opines TG Dhandapani, CIO, TVS Motors, “Firms that reject datacenter on cloud for the reason that the data resides outside India, may resort to a local datacenter. Local datacenters will bring cost and convenience advantages over traditional cloud platforms and have a good scope. I believe that most banks, insurance companies and telcos will prefer a local datacenter.”

By going in for a local provider, firms can make sure that any dispute is resolved within the jurisdiction of the local authority. “Local datacenters will be a game changer in terms of compliance and cost. This will also help in addressing many local breach cases as there will be more accountability from the service provider with respect to compliance,” states Mani Kant Singh R, CIO, Orbis Financial.

Hosting a server in India also helps in saving precious international bandwidth. “By going in for a local datacenter, Indian organizations can reduce costs significantly. Additionally, local datacenters can take the specific requirements of Indian organizations into account,” says Suresh Shanmugam,  Head-BITS, Mahindra & Mahindra Financial Services.

Firms that reject data center on cloud for the reason that the data resides outside India may resort to a local data center. I believe that most banks, insurance companies, and telcos will prefer a local data center

- TG Dhandapani CIO, TVS Motors.

The cloud’s potential to slash costs and boost innovation has led many Indian organizations to consider cloud computing. “IT organizations typically spend around 30% of their budget on infrastructure. Shifting some or all of this work to the cloud can save organizations anywhere from 10-20% of their annual IT budget. These savings then can be re-utilized for growth and/or innovation,” says Shailesh Joshi, CIO, Godrej Industries. This rapid rise in cloud adoption is boosting the demand for local data centers.

Indian exchanges which spend large amounts of money and resources to keep their lights on in their data centers can breathe easy once they migrate to a local cloud. Additionally, commodity markets will be able to handle large volumes of data at lower costs

- LS Subramanian Founder, NISE.

RISING DOMESTIC DEMAND

Global players and Indian corporate firms have realized that as more and more customers are based in India, it makes more sense to host their website in a local data center as the website will load and serve web pages faster.

Says Santosh D’Souza, Director Systems Engineering, NetApp, “The convergence of several socio-economic and business trends contribute to this expectation. As global and national consumption of various products and services bounces back from a cycle of weak demand, Indian enterprises and service providers will need to scale existing IT infrastructure to cater to the business growth. The policy environment for new initiatives is set to become simpler and easier, sparking expectations of new enterprises entering various sectors. Small and medium businesses are increasingly adopting IT to scale but may not have the skills to manage the infrastructure. Government initiatives like Smart Cities and Digital India will catalyze new IT infrastructure requirements. Finally, increasingly competitive markets almost inevitably lead to enterprises relying on IT for innovation and differentiation. The outlook, therefore, for local data centers is quite bright.”

With concepts like ‘Make in India’ and ‘Smart Cities’ gaining prominence, the trend towards online is increasing. These trends are pushing local organizations in sectors such as telecom, banking, and manufacturing to increasingly look at local datacenters to fulfill the huge domestic demand. By going in for local datacenters, enterprises will also not need to worry about regulations and compliance requirements that govern the physical location of their data. If more and more Indian enterprises start using local datacenters, the country will save precious international bandwidth and costs and spur creation of employment for millions of people.