Small nations preferred over India for data center business

Even though India can boast of having one of the biggest IT backend as well as back office services in the world, it still has mile to go to become a global data center hub. Factors like outdated telecom policies, infrastructure bottlenecks and uncertain power situation in the country has led to smaller countries like Hong Kong, Singapore and Taiwan being preferred for data center business instead.


It is to be noted that internet biggies like Facebook, Amazon or Google do not have data centers in India. Law and order problems, high bandwidth costs and enforceability of contracts are some of the other impediments that prevent these and many other companies from setting up server units in the country. This has also led to many Indian portals setting up their servers in the US in spite of having their user base in India.

Currently, Hong Kong is considered as the most suitable country in the Asia Pacific for data center business. Singapore and Taiwan follow closely behind as the most preferred locations for data centers. Factors like strong infrastructure, cheap bandwidth and low cost of capital in these countries are the driving factors for the same.


Another issue is related to the charges incurred at cable landing stations, the points where optical fiber cables carrying internet traffic enter/exit the mainland. Owners operating these stations usually demand high fees for the passage of internet service traffic through these points.

These challenges have started forcing some data center firms like Netmagic to reinvent themselves by opting for alternate sources of energy (for ex: wind energy) for powering their units. Some companies have also started outsourcing their data centers to providers in order to cut down costs related to power and infrastructure. In fact, outsourcing over 150 racks can reduce costs to up to 50% for companies. Companies in India dealing with unscheduled power cuts are keener to outsource their data centers to international providers in Singapore, Hong Kong and Taiwan.


However, experts in India are still optimistic about a favorable future for data center business in the country. The emergence of a third platform as well as its meteoritic rise has led to an increase in the domestic server capacity. This platform dealing with mobile, cloud, social and big data is transforming the IT field faster than the mainframe and client/server platforms. This platform would lead to an increase in the traction of cloud and enterprise solutions as well, thereby leading to the rise of more domestic data centers and companies that provide them.

India is losing out its data center business to countries like Singapore, Hong Kong and Taiwan. Uncertain power problems, poor infrastructure and high bandwidth costs are some of the reasons for the same. However, companies in India are optimistic that the rising third platform would lead to the rise of more data centers in the country irrespective of these hurdles.

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