Covid-19 drives data centre and storage industry boom in India

///Covid-19 drives data centre and storage industry boom in India

Covid-19 drives data centre and storage industry boom in India

by India Global Business Staff

Industry revenue forecast to grow to $4.5 billion by 2024 and attract fresh investments due to growing demand of IoT/connected devices and Digital India initiatives.

The emergence of 5G, the Internet of Things (IoT) and the Covid-19 pandemic have converged to unlock unprecedented opportunities for companies and investors in the technology sector – and India’s enterprise storage industry is a prime example of that spurt in demand.

While the Covid-19 crisis is likely to impact the revenue growth of data storage and data centre industries across key Asia-Pacific (APAC) economies such as China and Japan, the market in India is estimated to grow at a compound annual growth rate (CAGR) of 4 per cent from 2019 to 2024 to reach $4.5 billion in 2024.

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The Devil is in the data

Enterprise data storage and data centre markets were among the strongest drivers for investments in the Indian market.

Emerging tech driving data growth

The upsurge in the storage volume requirement, owing to growth in data volume driven by emerging technologies like big data, artificial intelligence (AI) and Internet of things (IoT), will continue to drive the enterprise storage spending in India, while the prospect of a 5G network rollout in 2021 will also help more investors to the sector.

In terms of big data, the Indian government has launched a big data management policy through the Comptroller and Auditor General of India (CAG) to shape and steer the market for big data and IoT, which is still in the nascent stage of growth. Thanks to that policy framework, the enterprise data storage and data centre markets were among the strongest drivers for investments in the Indian market – and the Covid-19 pandemic has sent millions of more people to remote working and learning, thereby further boosting the potential of the industry.

“India’s efforts related to data localisation law, data generation from client interactions, technology enhancements in storage, declining bandwidth price, availability of high-speed data connectivity and surge in e-commerce business will drive storage market growth during the forecast period,” said Shamim Khan, Senior Technology Analyst at GlobalData. Separately, the International Data Center (IDC) has estimated that data localisation is likely to increase the presence of cloud service providers, thereby increasing data center service revenue in the country.

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The cloud boom

Growing data privacy concerns are particularly paramount for BFSI sector.

Several Indian state governments have already taken the lead to attract Foreign Direct Investment (FDI) through tax incentives – Maharashtra, Andhra Pradesh and Telangana have announced incentives for data center development in the last two years. Pi Datacenter, CtrlS, Sify Technologies, Airtel(Nxtra), National Informatics Center, National Payment Corporation of India and Bridge Data Center are some of the prominent investors in the data center market in India, and with new cloud adoption protocols adopted, the cloud market is likely to grow at a CAGR of 20 per cent between 2020 and 2025.

According to GlobalData Market Opportunity Forecast Model, banking, financial services and insurance (BFSI), manufacturing, energy, information technology and retail will be the five leading verticals in terms of storage revenue, together accounting for 53 per cent of the overall revenue in 2024. BFSI will continue to account for the largest portion (13.7 per cent) of the overall storage revenue in 2024 in India. Growing data privacy concerns are particularly paramount for BFSI sector, and with the changes in operations as banks continue to embrace digitalisation through online banking and apps-based support.

“Digitisation initiatives will result in the huge volumes of data (structured as well as unstructured) requiring investment for storage, processing and security of these, considering customer privacy-related issues and government regulations like GDPR,” said Khan.

Steady growth for digital enterprise

The Devil is in the data

The International Data Center (IDC) has estimated that data localisation is likely to increase the presence of cloud service providers, thereby increasing data center service revenue in the country.

Data storage revenue of the manufacturing sector is projected to grow at a CAGR of 2.7 per cent during the period 2019-2024. Manufacturing sector depends on the collaboration of the design team, partners and suppliers, plus the in-house administration of data. The digitalisation initiatives which leverage new-era technologies like RPA and edge computing would be an added advantage where data storage is a necessity rather than a requirement.

“The enterprise storage industry in India will witness steady growth soon due to its economics/business structure, data security, data localisation laws, growing demand of big data analytics and IoT/connected devices and Digital India initiatives. Despite the COVID-19 pandemic, the storage market is expected to grow with enterprises preferring cloud-based storage options as compared to the current prominent Hard Disk Drive and Network-attached storage based products,” said Khan.

About the Author: India Global Business Staff