BANGALORE, INDIA: Leading IT intelligence firm, IDC India, has predicted that the India data centre services market will touch nearly Rs. 10,000 crore by the end of 2011, a CAGR of 22.7 per cent over the two-year period 2009-2011. The overall India data centre services market was estimated at Rs.. 6,300 crore in 2009.

The fast evolving ecosystem comprising high-speed Internet bandwidth service providers, data centre hosting players, power and cooling solution providers, hardware vendors and system integrators (SIs) will spur this growth over the next two years, according to IDC India report ‘Assessment of Business Opportunities in the India Data Centre Services Market’ (January, 2010).

The key verticals, that contributed nearly 80 per cent of third-party data centre services revenue in 2009, were Manufacturing and IT/ITeS, with the third-party data centres constituting about 18 per cent of the total revenues, the report added. IDC expects this to go up to 22 per cent by 2011.

Captive data centres (‘captives’) will grow at a CAGR of 19.9 per cent during 2009-11, with manufacturing and banking, financial services and insurance (BFSI) showing high deployment. Demand from the government sector is expected to pick up in 2010 and beyond.

“Third-party data center services are gaining traction with enterprise customers due to the lack of in-house skills, high investments and long gestation period that a data centre calls for”, stated Ravikant Sharma, senior analyst, User Research, IDC India.

“As the economy further strengthens in 2011 and IT adoption in SMBs increases further to achieve business growth objectives, this segment is expected to become the next growth driver for third party data centre services’, Ravikant added.

However, the customers will increasingly look for better technical skills and want to close the gap between commitment and delivery. Captives are being favoured in sectors involving high degree of security, internal controls and tighter management.

“Shrinking budgets, rising energy costs, increased preference for outsourcing and adoption of blade servers in data centres have led to new engagement and management models - ranging from co-location services to pay-per-use platforms,” said Arpan Gupta, senior analyst, Industry Verticals and Government Research Practice, IDC India.

“The India data centre services market is witnessing new trends in bandwidth pricing, power and cooling solutions. With increased focus on adoption of 'Green IT' enterprises and service providers are both looking to build energy efficient data centres through right sizing, improved system architecture and better design,” Arpan further added.

With bandwidth costs having come down significantly, data centre hosting in India is set to become cheaper. And with heightened interest in implementation of technologies like cloud computing and grid computing in data centres, the India market is expected to be a long term growth opportunity, according to the study.

India is all set to emerge as an important data centre hub of the world. With the Government encouraging companies and service providers to use alternative energy sources viz. solar, wind and water the rate of this change will grow, it added.