Home >Companies >News >Data centre consolidation will happen: NTT’s Sanghi

India’s data centre market is preparing for a phase of growth on the back of data localization policies and an accelerated, post-pandemic pivot towards digital technology by India Inc. NTT Ltd, among the biggest companies in this field with 10 data centres in India, is planning to open six more in the next 18 months, Sharad Sanghi, India chief executive officer of NTT, said in an interview. Edited excerpts:

What did the pandemic mean for the data centre industry?

Our industry was relatively okay. Other than construction getting delayed for a couple of months, by and large, the year was good for us. The coming year looks even better.

What is driving demand?

Everything is being consumed as a service, everything’s moving to the cloud. More clients are focusing on their core competencies and outsourcing their infrastructure requirements to cloud which has to be co-located in some data centres. Then there is the Personal Data Protection Bill (PDP), 2019. Even as the draft bill is about to get finalized, a lot of multinationals have decided to start preparing. Global banks, global hyper-scalers (companies that use very large data centres such as AWS) have decided to tap the market. There will be some restrictions on what can and cannot be hosted outside the country. Sensitive and critical data will have to be hosted in the country.

Besides, financial institutions are doing a lot of roll-outs in terms of payment gateways. There are new payment banks and traditional banks leveraging digital. There is demand from IT and ITES industries, manufacturing companies, government, media and entertainment. There are the e-commerce players, too—some of them are preparing for an IPO. Virtually, every vertical will need data centres where they co-locate, bring in their own servers or use cloud. End of the day, the servers and the networking equipment will reside in a third-party data centre. For the next few years, I see aggressive and robust growth and investments in the sector. NTT has announced it would invest $1.5 billion in data centres over the next four years.

Would you say this is the industry’s inflection point?

The first inflection was when the hyper-scalers decided to enter India in 2015-16. Now, there is another wave because of growth in cloud, the OTT players, etc. People realised that this is a hot market, particularly because other sectors in the real estate market were suffering. But I do believe there will be some consolidation. While right now, the demand is more than the supply, with 10-15 players all building data centres at the same time, not everyone will succeed. Large customers are few.

The Ministry of Electronics and Information Technology has recently come up with a draft policy on data centres. What did you think of the draft?

The intent is good. We have given our feedback in terms of ease of doing business...We want quick approvals. The good thing is that the draft policy looks at data centres as an essential service. It will be given an infrastructure status which would help in external commercial borrowings. However, I didn’t quite understand the need for having certain zones (the policy talks about setting up four data centre economic zones). Data centre providers like us have our own campuses and parks. I doubt if people are all going to get together and come to one park. Second, there are two lifelines in a data centre—power and connectivity. How to get power from two different grids or receiving stations? We have asked these to be eased.

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