data centre market in india

7/25/2019 Data Centre Market in India

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Data Centres Market in India

2015


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Alchemy Research and Analytics2

Executive Summary

Industry Overview

o Market Sizeo Comparison with Global Markets

o Growth trend and forecasts

Demand-side analysis

o Demand drivers across major sectors

o Emerging demand from public sector schemes (Digital India Programme)

o Outlook of data requirements from major sectors

Supply-side analysis

o Types of players: captive vs. third party

o Major players

o Comparison of major players across select KPIs

Location analysis

o Comparative analyses of major sub-markets

o Recent developments in top three sub-markets

Trends and outlook

o Technology trends

o Industry outlook

Contents


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Executive Summary

Data centre infrastructure market, in terms of revenue, is estimated at $2.03 billion for 2015

enterprise networking contributes the maximum share (47%) to this, followed by servers (33%)

Growth of Indian data centre market is forecast to reach 20% YoY, against the 11% globally for the

period 2013-18 Cloud service adoption is driving much of the data centre market. The Indian market in this regard is

unique due to the rapid growth in all cloud segments such as IaaS, PaaS, etc.

Market size and

growth

BFSI, telecom and IT&ITES are the major sectors driving demand for data centres in India. Adding to the

momentum is the rising IT penetration and social media consumption in the country

A bigger demand potential in Indian data centres market is being generated by public investments in

large scale digitisation christened as the Digital India Scheme

Demand Drivers

Captive data centres have a dominant share of the market. But they are gradually ceding ground to

third-party service providers they account for about 40% share, compared to 20% five years ago

Most of the data centres are Tier III based, though increasingly suppliers are enhancing their standards

with higher availability and redundancy

An investment worth $1.6 billion is underway in the Indian data centre market

Based on projects under construction, 2.38 million sq ft. expected before 2017

Data Centre

Providers

Software-defined infrastructure is setting the case for next generation data centres. These are part ofongoing steps towards technology integration and automation in data centre processes

Analytics platforms increasingly playing a key role, to manage data centres growing complexities as

well as demanding requirements of development costs, network availability, security, etc.

Open source architecture is finding greater preference due to its amenability in integrating legacy

systems as well as maintaining vendor neutrality

Software-led

business model


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Demand


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Major Sectors Driving Demand for Data Centres

BFSI

Telecom

IT and IT-enabled

services

Driven by increasing mobile penetration and usage, telecom service providers are augmenting

infrastructure not only to meet demand (mainly data) but also quality

The top three players (over 90% revenue market share) reported 70% YoY growth in data

revenues for the quarter ended June 2015

Shift to 4G as a key differentiator network rollout will necessitate significant investments.

Reliance Jio is working on 14 data centres to complement its 4G rollout by end-2015

M-Governance a government initiative about mobile-based public services involves State

owned Data Centres for cloud-based offerings

The demand in IT and IT-enabled services is creating the need for new data centres. Third-party

provision is increasingly attractive for the costs and efficiencies involved IBM recently announced its plans to set up a second data centre in India. Microsoft plans to

get its data centre operational by end-2015

Enterprises network solutions is the focus area. Airtel partnered with Amazon Web Services

(AWS) to offer private network solutions. AWS is planning data centres in India to scale up

Indian financial services sector is the predominant demand driver. It already has the highest

penetration in the data centres market, and will be maintaining its leadership

The industry as a whole is projected to grow at CAGR 12-15% in next five years

New banking licences (payment banks and full-service commercial banks) involve technologyplay as entrants seek to reduce costs through cloud-based services

In about a year, Governments payment gateway RuPay accounted for about a third of total

debit cards operational in the country. By March 2016, RuPay credit cards are expected

Source: Ministry of External Affairs, India Mobile Broadband Index 2015, NASSCOM, Times of India, Data.gov.in


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Key Enabling Factors Contributing to Data Centre Demand

Virtualisation

Cloud-

computing

632

1,900

0

500

1,000

1,500

2,000

2014 2018

$million

Advent of cloud-computing has

increasingly led to a service-based model

of data centre

The exponential growth in cloud services

market is shaping data centre demand

Virtualisation across server, desktop or

storage, helps reduce the hardware costand enables greater flexibility and

efficiency in data centres

As per IDC, server virtualisation market

in India will reach $3.89 billion by 2020

Projected Growth in Indian Cloud Services Market

0.9

6.2

16.5

0.32.7

7.0

0

5

10

15

20

2 Mbps 45 Mbps 155 Mbps

Rsmillionperannum

Existing tariff Revised tariff

Rationalisation in Cost of Leased Line Lately, broadband costs have declined. In July 2014, TRAI

reduced the ceiling rates for domestic bandwidth by 60% - this

contributes towards the operational costs of data centres

Increasingly, IT managers are seeking converged infrastructure to

reduce complexity and overall costs of managing data centres

Hyperscale IT (such as those of Amazon and Facebook) is

being sought for lowering costs and higher efficiency

Automation in processes, especially in software-defined

environments help service providers cut costs

Source: Dazeinfo, StorageServers, Express Computer, The Hindu BusinessLine

Technology

Operational costs


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Worlds largest financial inclusion project

177 million accounts till August, 2015

Universal access to financial services

Almost 90% of subsidy beneficiaries data

being digitised

To be integrated with unique IDs

Anticipated Demand from the Digital India Scheme

100 Mbps rural broadband through common service

centres at capex of $5 billion by December 2016

Virtual Network Operators for urban broadband

Mobile services to 55,669 unpenetrated villages and

upgradation of 150,000 post offices

Electronic delivery of public services (e-governance),

electronic databases and workflow automation in

government department

Digital locker a sharable private space on public cloud

system to safely store e-documents and certificates

Infrastructure

demand

generated

National information infrastructure, at an estimated cost of $5 billion to integrate networks like

SWAN,NKN and NOFN with cloud-enabled national and state data centres

Third-party cloud data centres planned to manage costs. Governments cloud-service Meghraj

seeks to provide high-speed connectivity to various departments

Company Planned initiative Proposed investment ($ billion)

Reliance Industries Ltd (RIL) Infrastructure for broadband network 39.06

Bharti Enterprises Digital infrastructure 15.63

Reliance ADAG Digital, Cloud and Telecom infrastructure 1.56

Source: Financial Express, Economic Times, Forbes India, PMJDY website, Mint

Recent Major Investment Announcements

Key projects in focusDigital India Scheme salient features

DBT

PMJDY

Aadhaar

Worlds largest unique ID project so far

generated 903 million IDs Outlay of $2.13 billion for 2009-17


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Supply


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80%

20%

75%

25%

Source: Frost & Sullivan, CyberMedia Research, NetMagic Solutions, Financial Express

60-70 %

30-40 %

Captive

3rd party

Captive centres dominate. But third-party providers on the rise

2010 2013 2015

Projected growth in third-party data centre capacity

3.15

9.14

2012 2018 E

millions

q.

ft.

Over 70% of the projected growth in third-party data centres to

be driven by verticals of BFSI, media and entertainment, telecom

and retail among others

High opportunity cost of reliable power supply as well as real

estate is increasingly tipping the scale in favour of third party

Third party data centres are increasingly consolidating their

position through steps in technology and value added services

Outsourcing requirements of BFSI and government

services fuelling the multi-tenanted data centre segment

Telcos transition to 4G/LTE technology another key driver


10/16


Source: Rcom, The Economic Times, Business Standard, NDTV Profit, The Indian Express, The Hindu Business Line

Major players- by size of data centres

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

0 2 4 6 8 10 12

000

sqft

Reliance

IDC

48%

Tata IDC

31%

*Netmagic

7%

Others14%

* As of 2012

Market share across DC players

Service providers augmenting capacities

Planned capacity addition by 2017

- 500,000

CtrlS

NetmagicESDS

Pi

Tata

Reliance

Size (sq ft)

About 80% of the market appears to be concentrated between the data

centres of Reliance and Tata

With Tata group scouting for buyers for its data centres, the market

shares are set to change significantly in the near future

As with Tata group, a consolidation can be expected in the market for

other players as well. Airtel and BSNL for instance are operational in

both captive and third party segments

Based on plans, an estimated $1.6 billion worth of investment is being

committed for upcoming data centre capacity during the period 2015-18

Reliance is in the process of establishing its 10th data centre in

Mumbai with a capacity of 650,000 sq. ft


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Captive Third party Storage Server DR* Security Managed service

Netmagic Solutions

Sify Technologies

CtrlS Datacentres

Trimax

Net4 India

ESDS Software Solutions

Reliance

Tata Communications

BSNL

Bharti Airtel (Nxtra Data)

Spectra Solutions

Cyfuture

DataGalaxy

Aride Ocean

Source: Company Website

* DR- Disaster Recovery

Presence across segments

Most of the data centre providers operate in the service segments of third party, storage and server due to demand for

consolidation and virtualization

Tata Communications is reportedly in talks for hiving off its data centre business. Key players reported to be in discussion

for acquiring the capacity are Google and Amazon Web Services

BFSI and telecom verticals are predominant in the captive data centre segment


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Trends and Outlook


13/16


Source: ResearchGate Report, StorageServers, CXOtoday.com

-29%

149%218%

280% 252%331%

368%413% 382%

430%

-100%

0%

100%200%

300%

400%

500%

0

2

4

6

8

10

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

$million

Investment Saving RoI

VMware RoI calculator of total cost of ownership

Potential $3.8 billion Impact of Virtualization by 2020

Servers

61%

Server

administration

21%

Power/cooling

17%

Floor space

1%

SMB enterprises are driving the adoption

of virtualization to slash operational costs

Servers offer the maximum scope

Pure-play service providers aretailoring solutions for SMBs

Virtualisation to manage costs and scalability

SMBs

Incremental data centre investments are

relying on virtualisation for disaster

recovery centres

It is expected that upcoming data centres

for Digital India scheme will significantly

deploy virtual servers for disaster recovery

mechanisms

Disaster

Recovery


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Source: IBM India, Times of India, Gartner, International Business Times

477632

838

1,900

0

500

1,000

1,500

2,000

2013 2014 2015 2018

$million

Growth in Public Cloud Service Market

Cloud services shaping the data centre market

Planned investment

Microsoft $22.7 million for setting up three cloud service data centres in Mumbai, Pune and Chennai

IBM Planning to set up second data centre in India, to add to the one operating in Mumbai presently

Amazon Web Services Multiple data centres planned by 2016. In the fray to acquire Tata Communications data centre

NTT Communications $100 million through Netmagic Solutions (NTTs Indian subsidiary) to set up ninth data centre in Mumbai

ESDS Software About $53 million to set up data centres in Navi Mumbai, Bengaluru and Nashik

NxtGen Datacenter &

Cloud Technologies

Raised $13.5 million from IFC, Axon Partners Group and Intel Capital for data centre in Bangalore and

enhanced cloud service offerings

Gartners Cloud Adoption Survey in January 2015 revealed

53% of organisations were using cloud services. Another

43% in the same survey indicated planned adoption by end

of year

Key segments driving the growth in cloud services include:

Cloud infrastructure as a service

Cloud management and security service

Cloud application infrastructure platform as a service

The Indian market is witnessing growth in all segments of

cloud services


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Ongoing transition to a next generation data centre

Stages in transforming data centre from traditional to next-generation

Consolidation

and Integration

Standardisation

and Optimization

Automation and

Simplification

Dynamic

Optimization

Better asset utilisation by

removing redundant

systems and applications

Virtualisation to enable

greater flexibility in IT

resources

Deploy analytics to get

accurate estimates of

system redundancies and

efficiencies

Define and prioritise the

operational services in

data centre

Standardising the

common IT services for

consistent delivery

Service optimisation to

re-orient IT spending

from routine activities to

innovative practices

Managing IT services with

the minimum of human

intervention

Automated workflow

Self-service portals and

standardised catalogue of

services for users

Determine effective price

points of several cloud-

processed services

Extension of cloud and

automation to a software

defined environment

Infrastructure to

dynamically respond to

changes in workload

Enhanced security and

compliance

Big data analytics assumes

a critical role

Workloads assigned manually to

server, storage and networking Manual IT optimisation

Reactive approach to scenarios of

threats and opportunities

Traditional data centre

Automatic workload assignment

to best-fit resources Software-defined optimisation

Proactive approach to threats and

opportunities

Software-defined data centre

Workload assignment based on

infrastructure pattern analysis Dynamic optimisation with

cognitive learning

Proactive approach to threats and

opportunities

Next-generation data centre

Source: Alchemy Research Analysis


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ontact

Niladri Paul

T: + 91 (0) 343 255 0131

M: +91 (0) 980 008 6550Email: [email protected]

www.alchemy-research.com

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