Inside the new business that could soon rewrite rules of the data game

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NEW DELHI: Whether data is the next oil is debatable, but what can’t be up for debate is the surge in data production and consumption in India. And with the government’s mandate on data localization and data-driven business ecosystem driven by 5G, ventures in the data centre space are the next big thing for investors.Conglomerates such as the Hiranandani group and the Adanis are placing big bets in data outsourcing facilities by building hyperscale data parks in metro cities. Other local cloud providers such as Sify, CtrlS and ESDS already have colocation services in tier 1, tier-2 and tier-3 cities.Global players are foraying in the segment through joint ventures or mergers and acquisitions like Japanese company NTT acquired NetMagic in 2016. Europe-based Colt and Singapore-based Bridge have also announced their major expansion plans in India. Telecom operators such as Bharti Airtel and Reliance Jio have also stated plans to build as many as 10-15 data centres across the country.“Growing at a very healthy 25% CAGR, driven by the explosive growth of data in India, data centres are all set to script a winning story in India and FDI inflows are expected to be in the range of $1 billion or more in the next 2-3 years,” said Lux Rao, Director – Solutions & Consulting, NTT India.On January 14, the government met information technology and ecommerce companies and sought suggestions to attract investment in data storage infrastructure as a precursor to a national policy on ecommerce. In a meeting with around 20 companies and industry associations, the Department for Promotion of Industry and Internal Trade (DPIIT) also asked Amazon, Microsoft and Wipro to compile challenges and possible solutions for data storage, and come back to the department in two weeks.Experts say the challenges to the data centre business include of speedy approvals, of locations, and most of all, of privacy and handling, say experts.Still, with the growing realisation of the humongous volumes of data being produced and consumed in India, there must also be refineries to process this, say analysts. Data centres do exactly that. They are storage facilities with racks of hardware at a remote place, being used by every corner of the world.Some are in house, or enterprises use for own data. But others are on a colocation basis.Colocation refers to a data centre that rents space with power and cooling to other companies. It eliminates high costs associated with owning a data centre such as real estate and power consumption and is an attractive option for all enterprises from startups to tech giants.According to Structure Research, the overall colocation revenue in India is pegged at $730 million this year, and is poised to hit $2 billion within five years, said Gary Newbold, VP, Asia Pacific at CommScope, a global communications service company.Rao added that currently, enterprises are seeing tremendous merit in adopting hybrid environments that span the spectrum – from in-house data centres, private cloud, co-location, virtual private cloud to public cloud environments.“A hybrid environment provides tremendous flexibility to enterprises in choosing their hosting environments,” said Rao.Emerging technologies such as Internet of Things (IoT) enabled by high-speed connectivity of 5G will dramatically increase the amount of data the country will need to process.“Under the ‘Smart Cities Mission,’ India is pushing forward with an aggressive plan to create 100 IoT-enabled smart cities, with some US$14 billion in funding,” Newbold said.A look at the challengesSince India is a nascent market and the boom in data centre business is happening at a very fast pace, it is important that authorities take part in these changing dynamics at a similar pace, and address challenges, experts say.“The authorities look at a data centre building with the same lens as any other commercial building. For instance, a 4-lakh square feet building with hardware equipment and just 50 people managing it does not require parking space or windows,” said Sunil Gupta, CEO, Yotta, a hyperscale project by Hinranandani group.Also, there is a need for single window clearances for approvals, right from land acquisition to uninterrupted power supply, he added.Distance is another constraint when it comes to latency requirement. The round-trip delay in data travelling across India is 10-15 milliseconds, said Gupta.However, the latency requirements of upcoming tech like 5G, IoT, self-driving cars, smart cities are being fulfilled by edge data centres which are smaller facilities built in tier-2 and tier-3 cities to bring this resource closer to the user.There is also a risk of data breach/mishandling when data is being managed by a third-party which is outsourcing it to multiple companies on a shared basis, technology experts believe.“The multi-user environment of the cloud service providers poses a risk of data leakage both internally (data mishandling by the third party) and externally (malicious hacks of cloud providers or compromises of cloud accounts). To mitigate such risks, key security and protection clauses should be included in the contracts signed with the cloud service providers to safeguard their interest in case of any breach,” Monesh Dange, Partner & Leader – Advisory Markets at EY India.The Personal Data Protection Bill introduced recently in Parliament defines a data processor as any individual/company who processes personal data on behalf of a data fiduciary. However, whether such a processor is equally accountable for security of data along with the fiduciary is still a grey area, analysts say.“While the ownership of personal data is unambiguous, the service providers are custodians of data and should be treated as such,” said Rao.“The question of service provider accountability is moot as one can argue for against the merits vis-à-vis economics. That said, prevention is always the best option compared to recovery,” he added.

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