Digital adoption, localisation norms fuel huge demand for data centres

WFH, online education, video-based medical advice, spike in e-commerce and business-related video conferencing and webinars are some of the key drivers

Digital adoption, triggered by the Covid-19 and the regulatory requirements for multi-national companies to store and process user data within the country’s borders, has resulted in a huge demand for data centres.

“The pandemic has been a massive catalyst for digital adoption,” said Shobhit Agarwal, managing director and chief executive officer of property consultant Anarock Capital. “Work-from-home compulsions, online education, video-based medical consultations, a huge increase in e-commerce, and business-related videoconferencing and webinars are increasing the demand for data centres. Furthermore, the government’s move to make data localisation mandatory ensures a promising future for data centres.”

According to Anarock’s report, data centres in the top eight cities such as Mumbai, Chennai, Bengaluru, and Hyderabad occupy 7.5 million square feet of space and an additional 10 million square feet is likely to be added over the next two-three years. Immediately after India imposed a lockdown, there was a 25-35 per cent increase in data centre capacity usage as companies began to overhaul their digital infrastructure, the consultant observed.

“Data storage in India has grown eight times to 2.8 zettabytes since 2014, driven by rapid adoption of Cloud, growth in digital transactions and e-commerce,” said B S Rao, vice-president (marketing), CtrlS. “Once the proposed Personal Data Protection Bill, 2019, is enacted, all multinationals operating in India will have to localise data. This will be a key growth driver for Indian data centres, besides emerging technologies, such as the internet of things (IoT), 5G, and Big Data.”

According to industry estimates, the data centre outsourcing market in India is worth over $2 billion and is projected to grow at a compound annual growth rate of 25 per cent to reach $5 billion by 2023-24.