Data Centre industry to see USD 5 billion investment by 2025 on data localization, higher digitization : Report

The data centre business has entities like Japan’s NTT, Sify, Hiranandani Group etc. in the fray already, and others like the Adani Group and an arm of Bharti Airtel have already announced investment plans. 

Data centres, which have seen a massive growth on the back of data localisation diktats and the pandemic, will witness USD 5 billion in investments till March 2025 and a threefold increase in capacity, a report said on Monday. The overall capacity, which is measured by the amount of power they consume, stood at 360 MW as of March 2020 and the same is expected to surge to 1,100-1,200 MW by end of March 2025 after the investments of up to USD 5 billion, the report by the research arm of rating agency Crisil said.

The data centre business has entities like Japan’s NTT, Sify, Hiranandani Group etc in the fray already, and others like the Adani Group and an arm of Bharti Airtel have already announced investment plans. The research note said there was a 38 per cent growth in data consumption in April-June period and the consumption will continue to grow at a compounded rate of 25-30 per cent per year in the next few years, it said.

The growth in consumption will be driven by factors such as high growth in e-commerce, increase in usage of social media, greater preference for over the top (OTT) platforms, the government’s impetus to the Digital India initiative and rapid digitalisation of services across industries, it said. Data localisation norms initiated by the government and regulators, which mandate storage of sensitive data within India, will also support development of local data centres, it said.

Citing industry lobby Nasscom’s report, it said over three-fourth of the total IT infrastructure spends were concentrated towards captive and co-location based operating mode as of FY2020. By fiscal 2025, however, the share of infrastructure-as-a-service (IaaS) in IT infrastructure spends is forecast to increase to more than 40 per cent, it said, adding shift towards IaaS will continue as rapid adoption of Industry 4.0-led revolution leads to exponential growth in data volume and increases the need for scalability of resources.

As the adoption of cloud services increases, data centre demand will transition from captive to co-location and IaaS-based offerings, it said. The data centre industry has been largely concentrated in top four cities, with Mumbai, Delhi, Bengaluru and Chennai accounting for 60 per cent of total data centre sites and more than 75 per cent in terms of IT load capacities, it said. However, share of these cities will decline marginally in the next five years as lack of space and higher rental costs along with improved infrastructure availability in next rung cities leads to some larger hyperscale data centres being set up in those cities, it said.

Source : https://www.financialexpress.com/industry/technology/data-centre-industry-to-see-usd-5-billion-investment-by-2025-on-data-localisation-higher-digitisation-report/2119552/

Date : November 2, 2020

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