India commands a dominant position in South Asia for data center colocation services, accounting for approximately 92% of the region’s market share. This leadership is expected to persist in the coming years, driven by robust demand from hyperscale cloud providers, over-the-top (OTT) platforms, content providers, and artificial intelligence (AI) companies. The surge in demand for hyperscale data center capacity stems from enterprises migrating their IT infrastructure to the public cloud, the impact of the rapid rise in AI adoption, heightened consumer reliance on cloud-based app/OTT services, and substantial growth in internet data consumption. Hyperscale requirements are anticipated to be the primary growth driver in the colocation industry moving forward. Demand from enterprise and retail sectors, particularly in BFSI and IT, will bolster market expansion.
Companies increasingly favor colocation data centers over establishing their own facilities to minimize capital expenditure, enhance operational efficiencies, and utilize advanced infrastructure. The pandemic has accelerated this shift, underscoring the importance of colocation facilities in ensuring uninterrupted business operations.
Competition in India is intensifying with the emergence of domestic players such as Yotta Infrastructure and Adani Group, alongside global giants, including Equinix and Colt, focused on service differentiation. However, operational complexities in data centers and the high costs associated with real estate and power remain challenges for existing colocation providers and potential new entrants.
Revenue Forecast
The revenue estimate of the base year 2023 is projected at 965.1$ million with a CAGR of 25.6% during the study period.
The Impact of Top 3 Strategic Imperatives on Data Center Colocation Services
Disruptive Technologies
why
- The ascent of artificial intelligence (AI) is spurring substantial transformation in the data center industry.
- These changes encompass infrastructure needs, scalability hurdles, energy efficiency concerns, and the integration of edge computing solutions.
Frost Perspective
- AI models require significant computational resources for training and inference.
- Data center providers are adjusting their strategies and architectures to cater to this escalating demand for AI workloads, while tackling the associated technological and environmental complexities.
Competitive Intensity
- The Indian data center colocation industry is highly competitive, with more than 10 participants dominating the market.
- The competitive intensity is expected to escalate as a fresh wave of competition emerges from domestic and global industry players.
Frost Perspective
- New data center buildouts continue across multiple cities in India. The high market potential is attracting significant investment from global participants, such as Colt, Equinix, Digital Realty, and leading domestic real estate companies, including Hiranandani and Adani Group.
Transformative Megatrends
- Sustainability is a paramount industry concern. Data center operators increasingly prioritize environmentally friendly practices to minimize their carbon footprint and mitigate the environmental impact of their operations.
Frost Perspective
- Data center service providers use lithium-ion batteries, advanced cooling solutions, and green solutions to improve their power usage effectiveness (PUE) scores and reduce their carbon footprint.
- Service providers’ focus on environmental sustainability will continue to evolve in emerging markets over the next few years.
Scope of Analysis
- Colocation refers to space rentals, such as private vaults, floor space, cages, and racks in different sizes. Infrastructure support covers power, cooling, physical security measures, and basic network connectivity. Addressing supplementary network and bandwidth requirements will incur additional charges. Customers pay a monthly or annual rent for the space (typically by power capacity) and facilities; they also need to purchase their servers.
- The data center colocation services market size includes hyperscale and retail. Service providers may offer professional services, system support services, security management, and related managed services based on the colocation deal.
- Carrier-neutral services involve data center colocation facilities independent of the network provider. They offer multiple connectivity options, and telecom service providers typically do not operate them.
- Raised floor space includes rack or physical space offering commercial colocation services measured in square feet or square meters.
- Revenue for the forecast period reflects the total potential revenue from the data center colocation services market.
- Data center tier classifications follow the definition from the Uptime Institute unless specified otherwise.
Growth Drivers
| Driver |
|---|
| The surge in demand for data storage and computing services from public cloud service providers is driving industry growth. |
| The rise of AI, digitization, advanced technology implementation, such as 5G and IoT, and emerging new use cases hold immense potential and will drive enterprise colocation demand. |
| Favorable government policies and digital transformation initiatives support colocation data center service growth. |
| Enterprises increasingly recognize the importance of disaster recovery and business continuity support, leading to an increased demand for data center colocation services. |
Growth Restraints
| Restraint |
|---|
| Rising energy costs are restraining market growth. |
| Increased competition and the pressing need for differentiation will likely be key factors in shaping industry participants’ market expansion strategies. |
| The country’s lack of a skilled workforce could hinder growth. |
Why is it Increasingly Difficult to Grow?
The Strategic Imperative 8™
The Impact of Top 3 Strategic Imperatives on Data Center Colocation Services
Growth Opportunities Fuel the Growth Pipeline Engine™
Scope of Analysis
Indian Data Center Colocation Services Market Ecosystem
Growth Metrics
Growth Drivers
Growth Drivers Analysis
Growth Drivers Analysis (continued)
Growth Restraints
Growth Restraints Analysis
South Asian Data Center Colocation Services Market
Forecast Assumptions
Revenue Forecast
Revenue Forecast Analysis
Other Market Trends in the Indian Data Center Colocation Services Industry
Competitive Landscape
Competitive Landscape and Supply-side Analysis
Competitive Landscape and Supply-side Analysis (continued)
Competitive Landscape and Supply-side Analysis (continued)
Competitive Landscape and Supply-side Analysis (continued)
Competitive Landscape and Supply-side Analysis (continued)
Competitive Landscape and Supply-side Analysis (continued)
Location Analysis
Location Analysis (continued)
Growth Opportunity 1: Rise in Demand for Hyperscale Colocation Data Center Services in India
Growth Opportunity 1: Rise in Demand for Hyperscale Colocation Data Center Services in India (continued)
Growth Opportunity 2: Increasing Investments in Edge Data Centers
Growth Opportunity 2: Increasing Investments in Edge Data Centers (continued)
Growth Opportunity 3: Growing Need for Sustainability and Green Energy
Growth Opportunity 3: Growing Need for Sustainability and Green Energy (continued)
List of Exhibits
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Research Highlights
This analysis provides a comprehensive overview of the Indian data center colocation services market, encompassing trends, strategic imperatives, recent developments, market drivers and barriers, revenue forecasts (2023–2028), compound annual growth rate, market share by raised floor space and industry verticals, competitive landscape, key participants, and growth opportunities. The insights are derived from a combination of primary and secondary research utilizing Frost & Sullivan's proprietary methodology. The companies covered are:
- ST Telemedia India
- NTT Netmagic
- Nxtradata
- CtrlS Datacenters
- Sify Technologies
Author: Kapil Baghel
| Deliverable Type | Market Research |
|---|---|
| Author | Kapil Baghel |
| Industries | Information Technology |
| No Index | No |
| Is Prebook | No |
| Keyword 1 | Data Center Colocation |
| Keyword 2 | India Data Centers |
| Keyword 3 | Data Center Market Analysis |
| Podcast | No |
| Predecessor | PEF7-01-00-00-00 |
| WIP Number | PFNK-01-00-00-00 |
Indian Data Center Colocation Services Growth Opportunities
Substantial Growth in Hyperscale Demand Drives Data Center Colocation Services
22-Jul-2024
Global
Market Research
