The third-party DC services market in India is estimated to reach $671m by the end of 2012, registering an annual growth of around 36.5%, according to a new study by IDC.
The annual study, "Data Centre Opportunities in India, 2011", found that 40% captive data centres were expected to be due for technology refresh or consideration of subscribing to third-party data centre services, as they existed for 5 years or more.
The study highlighted the major reasons for adoption of third party DC services. These include a growing need to focus on core business; lack and retention of skilled human resources for in-house management of data centre operations; and rising power, cooling and real estate costs.
The research firm said virtualisation and cloud would pave the way for the next generation data centre services adoption in India.
Apart from that, Cloud Computing, which is at a nascent stage in India, is promising to being a disruptive model for the consumption of IT in the coming few years. The other significant trend would be cloudification of the data centre facilities of the third party data centre services providers.
The IDC study also revealed the third-party data centre services market revenues reached $360m for the 12-month period ended March 2011.
IDC India country manager Jaideep Mehta said adoption of third-party data centre services has been on the rise by large as well as medium businesses, driven both by the need to cut costs as well as to lower the risks associated with investing in data centre equipment and technologies that face ever shortening refresh cycles.
"While a majority of the third-party data centre services revenues come from colocation and hosting services, the managed services component is steadily rising. The beginning of a major shift, beyond the vanilla co-lo and hosting play, however, is still two-three years away and would depend on the pace at which cloud-based models and offerings are able to mature in India," said Mehta.
IDC India research manager of Consulting Group Ravikant Sharma said while captive data centres in general offer a rapidly growing business opportunity, manufacturing, BFSI and IT & ITeS constitute the block of more attractive verticals.
"Further, the expenditure by businesses on their captive data centre build-outs and operations was $1.39bn in 2010, and would reach $1.94bn by the end of 2012, at an average year-on-year growth rate of 18.1%," said Sharma.
Telcos continued to hold the largest market share in the third-party data centre segment, with Reliance Communications being the market leader in revenue terms, followed by Tata Communications.
