How Investors View?

In Colliers’ maiden Indian investment report, They solicited responses from the top 40
institutional investors in the country to understand their investment priorities in 2019.
According to the survey, among the newer avenues for investment, about 63% of the
respondents preferred data centers as their first choice.
Link: http://www.colliers.com/-/media/files/apac/india/market%20insights/2019-colliers-radar-
investors-in-%20india-look-to-office-and-data-centers.pdf

IT infrastructure requirements-
commonly include servers, firewalls, storage systems and various other
IT components.
In order for these IT equipments to work in congruence with each
other they require uninterrupted power supply, backup power generators and proper
HVAC (Heating, Ventilation, and Air Conditioning) system in place.

Risks Of Data Centers-

1. Capital Intensive & Complex- Illiquid in Nature
2. Technologically Obsolete
3. Natural Disasters & Cyber Crimes
4. Share of captive data centers in data center market is decreasing , therefore
investments should be looked in sphere of colocation or managed hosting.

Key Investment Guidelines-

1. Design & Architecture is critical – Robust designs attracts more tenants &
investors
2. Expansion opportunity in terms of extra-space available & Up-gradation helps to
enhance the quality of assets.
3. Location plays an important role in terms of acquisition costs like land & building
as well as operation costs like cost of electricity, costs associated with skilled &
unskilled labour & its availability.

Types of Data Centers ( Investors Perspectives/supply side)-

1. Land Lord Model- Investor or developer provides basic facilities such as space
and/or power. Tenants set-up their own servers, facilities and staff as per their
requirements.
Risk of technological obsolescence and operations is with the tenants.
2. Co-Location Model- Investor/developer provides additional facilities eg.
engineering services, basic infrastructure facilities, network services, power and backup.
Tenants pay the rent and set-up their own servers.
The operational risk is with the developer and technological obsolescence is shared
between developer and tenant.
3. Managed hosting model- Here, the developers or investors provide holistic
data centre services to the tenants.
Tenant pays a premium on the rent to the developer or investor for carrying the risk of
operations and technological obsolescence.
Link: http://www.hdfcrealty.com/pdf/517342Data%20Centres%20HRLT.pdf

Key Vendor Analysis-

A. DATA CENTER INVESTORS-

1. Bharti Airtel (NXTRA DATA)

2. Bridge Data Centres
3. BSNL DATA CENTER
4. Colt Data Centre Services (COLt DCS)
5. CtrlS
6. GPX Global Systems
7. ITI Ltd
8. NTT Communications (Netmagic)
9. Pi DATACENTERS
10. Reliance Communications (Global Cloud Xchange)
11. Sify technologies
12. ST Telemedia Global Data Centres (STT GDC)

B. Data Center Critical (IT) Infrastructure Providers

1. Atos
2. Arista
3. Broadcom
4. Hewlett Packard Enterprise (HPE)
5. Cisco
6. Dell Technologies
7. Huawei
8. IBM
9. Lenovo
10. NetApp

C. Support Infrastructure Providers- It reduces power consumption, water

consumption, and carbon dioxide emissions will aid players a larger India data
center market share during the forecast period.

1. ABB
2. Caterpillar
3. Climaveneta (Mitsubishi Electric)
4. Cummins
 5. Delta Group
6. Eaton
7. Legrand
8. Larson & Turbo (L&T) Construction
9. NetRack Enclosures
10. Riello UPS
11. Rittal
12. Schneider Electric

https://www.prnewswire.com/news-releases/india-data-center-market-2019-2024-increased-
adoption-of-converged-and-hyper-converged-infrastructure-platforms-300783603.html

DATA CENTER Trends & Demand Drivers-

1. 699 Million Internet users and counting- Initiatives like digital India & a reduction in
cost of Internet has increased internet users substantially.
2. Increased Use of IOT- The IoT market is expected to increase to USD 15 billion by 2020
from USD 6 billion in 2016, growing at a CAGR of about 22%. This is likely to boost the
demand for DC services.
3. Indian public cloud services spending is expected to grow at a CAGR of 29%, from USD
968 million in 2015 to USD 3,528 million in 2020.
4. Big Data and business analytics: Big Data and business analytics revenue is expected to
rise to USD 4 billion by 2019 from USD 2 billion in 2016, growing at a CAGR of 25%. The
growth, driven primarily by IT/ITeS, will increase the demand for data storage space
(data centers)
5. The Personal Data Protection Bill, 2018: Section 40 of the Bill restricts cross-border
transfer of data. Data Fiduciary has a duty to store data on a server or data centre
located in India or mirror such data in India.
6. Govt's draft e-commerce policy focuses on data localisation which will impact
companies which does business in India but stores data abroad.
7. A shift in trend towards specialized data center service provider is prominent in the
industry as it reduces the operational cost and technical limitations in comparison to
captive data centers.

Link: For Trends https://www.communicationstoday.co.in/data-center-trends-for-india-in-

2019/ and the CBRE Report- http://www.realtynmore.com/wp-
content/uploads/2018/10/India-Is-India-the-next-frontier-for-the-data-center-industry-June-
2018.pdf
DATA Protection bill - http://rsrr.in/2019/02/05/data-localization-solution-to-privacy-concerns/
Draft e-commerce policy- https://www.vccircle.com/govt-s-draft-e-commerce-policy-focuses-
on-data-localisation-fighting-counterfeits

As per Colliers Report, the data centre market in India is estimated to be worth USD4.9 billion
(INR350 billion)in 2018 and is expected to reach USD7.0 billion (INR499 billion) in the next two
years, recording a growth rate of 23%-25%.

Link: https://www.colliers.com/-/media/files/apac/india/market%20insights/2019-real-estate-
trends.pdf

Types of Data Centers ( Demand side)-

1. Public cloud - Cloud infrastructure is multi-tenant or shared infrastructure. This allows a
company to save on costs.
2. Captive data centres/on-premise- These are private data centres set up on-premise.
3. Colocation - Colocation is a service that offers infrastructure on rent. You will have
complete control of your server and applications.
4. Managed hosting –Managed hosting is similar to colocation but with a few differences.
Here not only, you will have complete control of your server and applications, but any
upgrades and maintenance will have to be done by the service provider.
Link: https://www.digitalcreed.in/data-centre-india/

More Information about the above Types of Data Centers-

1. The public cloud services market in India is to grow to $1.9 billion in revenue and the
market will reach $4.1 billion in 2020.
2. India’s colocation and managed hosting services market would surpass $ 2 billion
in revenue by 2019 from $ 1.3 billion in 2016.
3. A shift in trend towards specialized datacenter service provider is prominent in the
industry as it reduces the operational cost and technical limitations in comparison to
captive datacenters.
Link: https://varindia.com/news/cloud-driving-the-present-datacenter-market 2018 april
report

DATA CENTERS LOCATIONS

The geographical segment in the India data center market is divided into Maharashtra,
Karnataka, Telangana, Andhra Pradesh and other states.
Telangana is one of the leading cities in the Indian market, expected to grow at the fastest
CAGR of around 19 percent during 2019-2024.
Major Cities are Mumbai, Bangalore, Hyderabad, Chennai, Delhi-NCR.

Link: http://bwcio.businessworld.in/article/India-Data-Center-Market-2019-2024/06-02-2019-
166872/