India Third Party Datacentre Services To Be A $1.1 Billion Mkt By 2015

The India third party datacentre services market is estimated to be US$1.1 billion by 2015, representing a Compounded Annual Growth Rate (CAGR) of 29% over the five-year period 2010-2015, finds Springboard Research. The overall India datacenter services market was estimated at US$244 million in 2009.

Springboard Research found that growth in third party datacentre is primarily driven by the need of businesses to rely on the expertise of a service provider as in-house management becomes either too costly or too inefficient. This especially holds true in an environment of continuously changing technology and increasing complexities. Moreover, enterprise managements are focused on reducing their upfront capital investments (CAPEX), and therefore are increasingly looking to outsource their datacentre needs, which is both cost effective and resource efficient. The respondents cited “lowering total cost of ownership” and “access to best of services with an agile IT setup” to be the key reasons for opting third party service providers.

According to Springboard Research, the investment in datacentre services as a percentage of total IT budget is expected to increase from 24.2% in 2010 to 29.8% in 2011. The increased investment in datacentre clearly shows the renewed focus of CIOs to ensure availability of information to the decision makers at all times.

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“With almost 65% to 75% of the allocated budget being spent on maintaining the datacentres, organisations are now seeking alternatives to bring down this percentage in order to have more capital available for innovation and for further growing their business,” notes Seepij Gupta, Associate Research Manager, IT Services, Springboard Research. “Third party service providers should differentiate themselves by providing a future roadmap to their clients, in addition to solving their current problems and thereby creating a long term relationship,” advised Gupta.

Gupta further added, “Consolidation, optimisation and productivity will be the key areas of focus for enterprise managements in the near future. Captive datacentres will undergo optimisation and will aim to consolidate and leverage their existing assets, while third party datacentres will build capacities aimed towards cloud services - especially Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS)”.

The bigger picture: Journey towards “Cloud”

The adoption of new business models like “pay per transaction/ use” coupled with technologies like virtualisation by Indian organisations are paving the way towards cloud-based services. As high as 70% of the respondent organisations rated ‘server virtualisation’ and ‘consolidation’ high on their priority list for future investments. This clearly is the first step in the journey towards ‘Cloud’. Currently, Indian organisations might not have cloud on their immediate agenda for budget allocations, but will soon step onto this bandwagon.

“Though infrastructure management currently contributes maximum to the discrete outsoucing revenue, the future growth lies in application management,” notes Frederic Giron, Vice President, IT Services, Springboard Research.

Giron further added, “Many of the third party datacentre providers have already launched their cloud services and are witnessing early success across industry segments. As the industry matures, we would see a definite shift from co-location services, which currently contribute more than 55% to the third party services revenue, to managed services and cloud based services."