India Third Party Datacenter Services To Be $1.1 Billion By 2015: Springboard

The India third party datacenter services market is estimated to be $1.1 billion by 2015, according to a new report by Springboard Research. The report adds that the market is likely to post a CAGR of 29 percent over the five-year period from 2010 to 2015. The overall India datacenter services market was estimated at $244 million in 2009.

According to the research, growth in third party datacenter is primarily driven by the need of businesses to rely on the expertise of a service provider as in-house management becomes either too costly or too inefficient. This especially holds true in an environment of continuously changing technology and increasing complexities.

Moreover, enterprise managements are focused on reducing their upfront Capex, and therefore are increasingly looking to outsource their datacenter needs. The respondents cited lowering total cost of ownership and access to best of services with an agile IT setup to be the key reasons for opting third party service providers.

According to Springboard Research, the investment in datacenter services as a percentage of total IT budget is expected to increase from 24.2 percent in 2010 to 29.8 percent in 2011. The increased investment in datacenter clearly shows the renewed focus of CIOs to ensure availability of information to the decision makers at all times.

“With almost 65 percent to 75 percent of the allocated budget being spent on maintaining the datacenters, organizations are now seeking alternatives to bring down this percentage in order to have more capital available for innovation and for further growing their business,” said Seepij Gupta, Associate Research Manager, IT Services at Springboard Research. “Third party service providers should differentiate themselves by providing a future roadmap to their clients, in addition to solving their current problems and thereby creating a long term relationship.”

“Consolidation, optimization and productivity will be the key areas of focus for enterprise managements in the near future. Captive datacenters will undergo optimization and will aim to consolidate and leverage their existing assets, while third party datacenters will build capacities aimed towards cloud services - especially Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS),” Gupta further added.

Towards cloud 

The adoption of new business models like pay per transaction/ use coupled with technologies like virtualization by Indian organizations are paving the way towards cloud-based services. As high as 70 percent of the respondent organizations rated server virtualization and consolidation high on their priority list for future investments. This clearly is the first step in the journey towards cloud. Currently, the Indian organizations might not have cloud on their immediate agenda for budget allocations, but will soon step onto this bandwagon.

“Though infrastructure management currently contributes maximum to the discrete outsoucing revenue, the future growth lies in application management,” said Frederic Giron, Vice President, IT Services at Springboard Research. “Many of the third party datacenter providers have already launched their cloud services and are witnessing early success across industry segments. As the industry matures, we would see a definite shift from co-location services, which currently contribute more than 55 percent to the third party services revenue, to managed services and cloud based services.”