Mumbai data center

Major cities such as Mumbai (pictured), Bangalore, and Hyderabad are witnessing high data investments peaks. Source: Shutterstock

Demand for data centers in India could double by 2025

  • Demand for data centers in India could as much as double within 5 years, report indicates
  • Consumer & enterprise demand coupled with a friendlier regulatory environment could see the local data center sector take off
  • The pandemic helped drive data digital acceleration initiatives amongst businesses on the subcontinent

Since being introduced in India in the mid-2010s, data centers have been growing in importance as more and more organizations drive demand for hybrid cloud and multi-cloud computing capabilities.

Many enterprises now run critical applications and carry out testing, research, and development data requirement within on-premises or offsite data storage locations. And as the data requirements continue expanding, hyper scaled data centers are being constructed in city hubs around the country.

Now a recent report by CBRE finds that the Indian data center market across Mumbai, Chennai, Bangalore, Kolkata, Hyderabad, Pune, and the National Capital Region are expected to experience a 40% data supply increase this year. Presently, the Mumbai data center has 41% data capacity filled, while the Bangalore and Delhi centers are next most-occupied at 17% and 16%, respectively.

The hike in demand for digital services throughout the country’s COVID-19 lockdown experience, has seen big spikes in online gaming, virtual learning platforms, video streaming services, and e-commerce usage, among others.

The consumer demand in addition to the data consumption by data-driven businesses and other organizations has seen data centers in India continue to scale up to meet the active demand. The rising demand is expected to be supported by a friendlier regulatory environment for the booming data economy on the Indian subcontinent, according to Anshuman Magazine, CBRE’s Chairman & CEO – India, South East Asia, Middle East & Africa.

“In the era of the fourth industrial revolution, we expect regulatory support to augment the Data Centre demand in India,” Magazine commented. “Policy impetus such as the National E-commerce Policy, Personal Data Protection Bill, proposed policy on Data Centre Parks and digital initiatives by the government will accelerate demand.”

And while industries around India cut expenditures and lay off staff because of the coronavirus, CBRE instead expects the pandemic to actually accelerate development and addition of data centers in the country. “The COVID-19 situation will further propel the next wave of growth in the sector and most importantly, the proposal to give DCs the coveted ‘Infrastructure status’ will place them high on global investor radar.”

The pandemic could stimulate enterprises to invest in cloud and hybrid IT infrastructures, with more companies migrating their operations online and corporate staff working from home in larger numbers than ever before.

CBRE anticipates that such demand drivers could cause other Indian cities like Kolkata, Pune, Gurgaon, Kochi and Jaipur to be among the first locales to construct edge data centers, owing to those urban centers’ abilities to service different geographic hubs around the country.

“Demand for outsourced data center solutions has increased in India and we understand that occupiers would require flexible, scalable data center solutions that are both operationally and financially optimal,” says Ram Chandnani, the Managing Director, Advisory & Transaction Services, for CBRE South Asia Pvt. Ltd.

There are at least ten data center projects which are expected to become operational between June 2020 and December 2022. Market research from Arizton indicates that the data center sector in India will grow at a compound annual growth rate (CAGR) of around 5% between now and 2025.

“Technology and automation would provide significant opportunities in terms of how data center operations evolve as we move forward in the next 3-5 years,” noted CBRE South Asia’s Chandnani.