Data centre and hosting services in India to grow at 6.2% CAGR during 2020-25

data centre

Hyderabad: The data centre and hosting services market in India to grow at 6.2% GACR during 2020-2025 forecasts GlobalData.

Due to the accelerated pace of digital transformation seen among enterprises and rising cloud services adoption, the enterprise spending opportunity in data centre and hosting services is expected to surge during the forecast period of 2020-2025.

The total addressable market size of the data centre and hosting services in India, in terms of enterprise spending opportunity, is poised to grow at a 6.2% CAGR during 2020-2025, forecasts GlobalData.

Growing data volumes generated by enterprises in India will encourage enterprises to invest in larger technology stacks, according to Saurabh Daga, Technology Analyst – GlobalData.

“Those larger technology stacks can provide scalable and reliable storage, compute and network capabilities to efficiently store, process, manage and share such data,” says Daga.

“These investments are driven by the rising adoption of digital technologies like mobility devices, sensors and IoT systems,” points out Daga.

“This will drive enterprise spending on data centre and hosting services in the country to reach $1.8 billion in 2025,” adds Daga.

Increasing the application of analytics, artificial intelligence, and machine learning technologies and the implementation of new applications and service models will also drive the demand for data centre and hosting services.

The ongoing shift in enterprise IT operations and spending on the cloud environment, partially compelled by the COVID-19 prompted a surge in the adoption of remote working and digital service models. And the overall digital transformation initiatives of enterprises via e-commerce and other application-based services hosted on data centres will also drive the market.

“Application hosting and data center services segment will be the largest contributor to the overall market value over the forecast period while the colocation services segment will witness a faster growth,” points out Daga.

Further, “the ongoing pandemic and challenging business environment are especially driving enterprises to adopt colocation services as the means to avoid large upfront capital and operational costs associated with captive data centre services,” adds Daga.

The massive demand for data centre services in India has pushed major international data centre operators to expand their footprint in India.

For example, NTT Limited announced in September 2021 that it will commission six new data centre parks over the next three years.

In April 2021, US-based storage and information management services company Iron Mountain entered into an agreement with India-based colocation provider Web Werks. They agreed to form a joint venture and invest up to $150 million over the next two years to develop a data centre infrastructure in India.   

This trend is also fuelled in part by data localisation regulation as several businesses, especially working in financial services, are dissuaded from outsourcing their data with public cloud providers, which host their servers outside of India.

Additionally, the Indian Ministry of Electronics & Information Technology (MeitY) has already prepared a draft policy to make the country a ‘data centre hub’, allocating concessions related to land acquisition, power availability, network connections and regulatory clearances and approvals.

According to Daga, large enterprises with over 1,000 employees will account for the larger share of the enterprise data centre and hosting market in India. And the small and medium businesses (SMBs) with under 1,000 employees will experience a marginally faster CAGR of 6.3% between 2020 and 2025.

“Small enterprises are also starting to invest more on data centers, owing to several government-backed initiatives such as Digital India and Atal Incubation,” concludes Daga.

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