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How Pandemic Turned Out To Be A Blessing In Disguise For Data Centres

How Pandemic Turned Out To Be A Blessing In Disguise For Data Centres

  • According to NASSCOM, cloud spending in India is estimated to grow at a CAGR of 30% to reach $7.1 billion in 2022.

According to a Global Data report, data centres have become a basic necessity in the post-pandemic world, along with water, electricity, gas, and telecoms. The data centre revenues are projected to hit $948 billion by 2030, up from $466 billion in 2020, growing at a CAGR of 6.7%. 

The findings of the report include:

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  • Most of the growth is expected around hyper-scale data centres
  • The new edge data centres will cater to increasing levels of enterprise-generated data being created and processed outside remote data centres or the cloud
  • The next few years will see more mergers and acquisition around data centres

Investments Galore

In 2019, the total investments in data centres stood at $244.74 billion. In 2020, the investments almost doubled, despite the pandemic. The Asia Pacific and North America have reported maximum growth as they invest in hyper-scale and edge data centres. The companies will also look to construct smart data centres closer to customers and increase efficiency while reducing these centres’ operational costs. 

The expansion of data centres reflects the growth of AI and machine learning fields. Leading tech companies such as Google, Microsoft, Facebook, and Alibaba have a strong dependence on data centres, with a significant part of their revenue spent on building, expanding and equipping massive data centres. Moreover, the pandemic has called for companies to adopt new architectures and software-defined, programmable infrastructures within data centres.

Reasons For The Growth

The data centres have become a vital fifth utility amid COVID-19. Increased cloud adoption, expansion of access to internet-related services aided by nation-wide lockdowns, data explosion, growth of the IoT market are some of the reasons cited for the surge in data centres. Below, we discuss some of the reasons in detail. 

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Cloud adoption: COVID has driven cloud adoption as working from home became a norm. In 2021, experts anticipate an increase in enterprise spend in cloud technology to ensure the smooth and efficient running of businesses. This continued demand for cloud services will also accelerate data centre construction projects to accommodate the hyper-scale needs. According to NASSCOM, cloud spending in India is estimated to grow at a CAGR of 30% to reach $7.1 billion in 2022. 

Data explosion: The COVID pandemic has radically changed our relationship with technology. Most businesses are turning online to ensure business continuity. Data generation has hit unprecedented levels due to increased internet usage and broader deployment of IoT devices. We need more data centres to store all data. According to research by CRISIL, data consumption has seen a 38% rise year-on-year in Q1FY21. 

Increased investments in data centres: The government is likely to earmark more money on the upcoming budgets to build data centres and establish infrastructure to promote the growth of data centres. Most data science companies are looking to invest heavily in hardware and applications. Investments are pouring in the form of construction, materials, operations, electricity expenses, and more. According to CRISIL, the industry capacity is expected to expand by more than three folds from the current ~360MW in fiscal 2020. It is also likely to see an investment of over $4-5 billion in both brownfield and greenfield projects.

Increase in digitisation: The pandemic has pushed digitisation like it’s nobody’s business. The desktop PC usage has gone up by over 35% post-COVID. The increased digitisation is expected to accelerate the demand for data centres and cloud infrastructure.

Data security: Most big and small players are looking for secure ways to store data. There has been a substantial investment in security and data protection policies, and investing in data centres is a safe way to ensure security.

Cost-effective and reliable source: Data centres provide flexibility, scalability while being affordable and reliable. 

Growth In India

Reports suggest the data centre market in India is expected to grow at a 12% CAGR. The data centre industry plays a prominent role in facilitating massive shifts in businesses and is expected to seamlessly continue providing digital infrastructure services. Many companies in India are looking to set up data centres. 

In India, the data centre industry has been concentrated mainly in the top four cities — Mumbai, Delhi, Bengaluru and Chennai, which accounts for more than 60% of India’s total data centre sites. Mumbai alone accounts for over 40% of total installed capacity. 

Many state governments are now investing to make data centres a centre of attraction for IT and AI workloads. For instance, Maharashtra and Telangana government offer land and electricity incentives and special single-window clearance for permissions to set up data centres. 

Moreover, the Data Centre Policy 2020 — the first draft released last year — ensures sustainable data centre capacity in meeting India’s tremendous data demand. The policy will ensure an uninterrupted power supply, infrastructural support, and more. Private players are also investing in data centres. Yotta Infrastructure, CtrlS, NTT Netmagic, Sify, STT GDC India are some of the leading names in the Indian data centre space. Over the years, new players such as Adani Group, Colt DCS, etc. have also emerged. 

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