In India, more and more Hyperscale data centers are being planned and built coupled with cloud architecture. As cloud adoption is rising, a robust and scalable infrastructure becomes extremely important. Companies are betting big on creating a wide network of edge data centers along with building Hyperscale data centers. A fine balance between both, would define the success of a data center company, moving forward.
In conversation with Mr.Rajesh Tapadia,CEO, Nxtra DataLtd, we attempted to seek his opinion and understand his side of story to the changing fortunes of the data center industry and how Nxtra is gearing up for the challenge.
According to you, based on your experience, how has the industry changed overall in the last 20 years?
The industry has drastically changed and now at the forefront to make biggest impact in the Digital transformation journey of India. Although the offering remains the same, overall, the design, size, scale, and customer segment has evolved. About 20 years back, when the third party data centers started coming up in India, people were talking about 2000 to 10000 sq.ft. Of capacity and majority of the customers were still building their own in-house data centres; there was a lot of discussions around build v/s buy. The power density per rack was much lower and companies were availing the services primarily for their internet facing applications like email & web hosting.
Over the years, lot of learnings and knowledge dissemination has really carved out the current form, shape and the trajectory of our Industry. Ecosystem of Consultants, OEM’s, Integrators, Service providers and even customers have come together to raise the bar. Businesses started relying on third party data centers for outsourcing their mission critical IT infrastructure. With the evolved & mature state of this industry, contemplation at CXO fraternity is to evaluate and decide what suits them more “Colocation or Cloud”. Thus, this journey of “Captive Vs Colocation” to “Colocation Vs Cloud” is a proof-point of the sea changes which has swayed this Industry into new arenas.
With the Advent of Data Localization and the government wanting to protect and safeguard the data, how do you think this will Impact the industry?
It is an important regulation that will accelerate the data centre demand in India. There are so many digital companies, especially in the social media and ecommerce space serving Indian consumers, need to bring back a lot of personal data stored outside. We look this as a big positive for the overall Industry and are well poised to support such companies for their India entry strategy with both quality data center capacities and connectivity solutions. We already see a traction where many global companies are looking at taking initial data centre capacities in India.
The overall occupancy rate in India for Data Center capacity is around 75%-80%. As vacancies exists and more data centres coming, would the demand be able to absorb the overall supply?
We believe that India is an underserved market aiming for the big digital economy. Digital growth anticipated over the next 5 years and the capacity required to serve the corresponding underlying digital layer, this gap is huge.
Talking about 75-80% of occupancy rate, it depends on the location and quality of the facilities, thus for many cities, demand is always moving faster than supply. You also need to factor the growth needed by your existing customers within the facility. Unfortunately, infrastructure creation takes time, so it is critical for us to look at demand in 2-3 years and start building now, if we have to narrow this gap.
Data centres need not be region specific right? Since you can have a business in Bhopal and take up a data center space in Mumbai right?
That’s correct, but it does not work that way usually. Ideally, demand is for a specific city and it depends on customer preferences and criterias. e.g. If an organisation is Mumbai HQ or their primary DC site is in Mumbai, a best suited location for their DR site will be a one, falling into a different zone. Customers also select data centers in cities which are closer or convenient for their IT teams. Thus, evaluation criteria are specific and unique to a business vertical and industry. A hyper scaler or an OTT player will typically go for locations with more eyeballs and maximum vicinity to their consumers. So, there are no fixed criteria’s; every customer is unique, and decides basis its business and technology objectives.
So latency is the biggest criteria, on the selection of data center?
For certain verticals, like hyper scalers and OTTs, latency is a key criteria, for others it may be a combination of various factors. For an enterprise, say a BFSI, Mumbai might be a preferred site, being a BFSI Hub, and also to mobilise IT teams to visit the facility faster in case required.
However, for MSME or SMB, location may not matter, as they would be mostly consuming services in the form of public cloud. So as I said earlier, there are multiple reasons and criteria’s for data center site selection, latency being top of the list for certain verticals for sure.
Many upcoming data centers are adopting a scalable model with having a mix of Co-Lo and Cloud. So more cloud-based service is the way forward?
There are majorly two segments. Earlier the discussions were, whether to outsource data centre or use in-house facilities, now the question is whether to use Colocation or cloud. But today, many cloud players also need Colocation capacity to create their scalable and reliable infrastructure, thus, end product in the value chain even for cloud service providers, is a Colocation Service. Therefore, the demand is expected to continue to grow both ways: Directly, by enterprises taking colocation services and in-directly by enterprises adopting to cloud driving cloud players to take wholesale colocation capacities.
Mumbai although a data center hub is 20% more expensive (cost wise) as compared to other data centers. So, why build more data centres in Mumbai? Won’t the Tier 2 cities do much better in terms of cost and cheaper land alternates?
In Mumbai, available capacity is low at this juncture. There is a dearth of supply, and demand is on rise for Mumbai because of some inherent advantage which this city brings. At Mumbai, we are looking at 20-25% growth in business and for that to happen, there has to be a consistent and steady supply to meet the demand curve.
What makes Nxtra data centres unique? How do you differentiate yourself from the competition?
We follow a three-fold approach.
First is deeper existing footprint & continuous augmentation: 10 sites in 7 markets covering every metro city. Expansion in terms of large scalable data centre campuses, across all key markets. Pace at which we are working and creating capacities with 3 projects already in progress and few more to start, talks about the focus and commitment we have as an organization.
Second big unique differentiator is, our edge data centres story: no one can match it in India. We have capacities in about 120 sites in India mapped to tier 2 /3 locations. Relatively small, but network dense, allow enterprises to go closer to their end customers with these sites. Airtel mobility and our enterprise customer are also getting served from these locations and some of the players like hyperscalers/ OTTs may want to leverage this infrastructure to reach to these eyeballs and improve experience of their products.
Third is connectivity: Being a part of Airtel, we provide and create seamless connectivity solutions. On global front, our submarine cables and landing stations integrate with our data centre platform and capable to offer stringent latency commitments for best user experience. Our multiple hyper scale data centres along with edge, are interconnected on a scalable and redundant fibre backbone powered by Airtel.
Lot of Hyperscalers is coming up with Tier 4 Data centers. According to you what is more preferable Tier 3 or Tier 4?
Hyper-scalers have their own specifications and we custom deliver them. Our perspective is, Building Tier 4 facility adds to the input CAPEX which translates to customer paying the premium.
Our design is unique with some tinge of flexibility. By doing certain trade-offs without compromising key features at Tier 4 design, we are able to optimize the cost and strike a fine balance for making a win-win situation for us and our customers.
Final Question, how is Nxtra planning to compete with Domestic and global players?
Data Centres are a major focus area of Airtel and we have big ambitions in this emerging space. We already have Carlyle making a strategic investment to enable us to grow the businesses. The market is big enough for all the players to co-exist and we aim to be one of the leading players in the market. Our inherent strengths, along with broad and interated B2B product portfolio and a large customer base to leverage, we are confident to emerge as a leader in the market.
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Ankur Gupta, Head Marketing & Communications
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