7 Key Factors Driving the Growth of Colocation in India


Colocation is gaining traction as a viable alternative to building and maintaining an on-premises data centre. In fact, according to a recent study by MarketsandMarkets, the global market for colocation is estimated to grow to $62 billion in 2022, up from $31 billion in 2017.

While cost has always been a major driving force for organizations outsourcing IT infrastructure management to colocation providers, of late, clients are focusing more on the value colocation brings to their business. Colocation centers allow them to access the whole spectrum of benefits whilst reducing their overall cost of operations.

Let us have a look at the elements driving the growth of colocation in India.

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1) Edge Computing

Across the world, businesses are trying to get real-time analytics. The faster they can analyse data and gain valuable insights, the faster they can respond to the changing trends. The demand for faster access to data has given birth to what we call edge computing. In an edge computing network, the processing infrastructure is placed close to where data is being generated, so that an organization can make fast decisions based on the latest data.

Companies using edge computing tend to choose colocation centers located in close proximity to their end-users. This way, they can easily move data to the colocation facility for analysis.

2) The Internet of Things (IoT)

The Internet of Things (IoT) has accelerated the demand for edge computing, and, therefore, the demand for a colocation in India. The growth of Internet of Things (IoT) shows no signs of slowing down in the foreseeable future. As per a prediction by Statisa, the global spending on IoT is expected to reach $1100 billion by 2023, up from $749 billion in 2020.

Many of the connected devices and sensors used by an organization may be located far away from its data centre facility. They may have been placed at a warehouse or at any other point along their supply chain.

A colocation facility located close to the connected devices can receive data from a RFID sensor or a beacon much faster than an on-premises data centre. As a result, the data does not need to travel over a long distance for storing and processing.

3) Enhanced Physical Security

Data breaches have been on a steady rise in recent years. According to a report, the total number of records compromised in 2020 exceeded 37 billion, a 141% increase over the previous year. Hackers are constantly devising new ways to infiltrate organizations’ data; they are using malware, phishing and, sometimes, even artificial intelligence algorithms to attack their networks.

Though businesses try their best to outsmart hackers, they tend to overlook physical security many times. Colocation services offer, among other benefits, enhanced physical security through a range of features-24*7 monitoring, CCTV cameras, alarms, biometric systems, and armed personnel-all of which restrict external entities from accessing your precious data.

4) Increasing Infrastructural Costs

Technologies such as AI, big data, and IoT entail high processing capacities; this has exponentially increased the IT infrastructure needs of organisations. Businesses need to spend a considerable part of their budget on renting additional space, buying equipment for power/cooling, and so on.

To ease the burden, many of them have begun to rent space in colocation centers to house their servers. Colocation providers offer state-of-the-art infrastructure for placing hardware at competitive rates; this helps companies to operate their infrastructure effectively without overstraining their budget.

5) Changing Compliance Regulations

It is often difficult to keep track of compliance regulations. Companies operating in the healthcare and financial space find it particularly difficult to comply with the data access and preservation rules applying to their industry. What’s worse is that these regulations are subject to change, creating even higher chances of a violation.

Colocation data centers undergo regular compliance audits conducted by reliable third parties. These may be related to HIPAA or PCI-DSS. A reliable colocation facility lets you have the peace of mind that you are meeting the regulations prevalent in your line of business.

6) Capacity for Expansion

Every business aims to expand their operations with time. Outsourcing IT management to a renowned colocation service provider allows a business ample room to grow and scale operations up and down depending on their needs. On the other hand, with an on-premises data center, they face the risk of not being able to respond to their fluctuating capacity needs; this may impede growth and hurt their long-term objectives.

7) Network Connectivity

Carrier-neutral colocation data centers in India offer an array of connectivity options to businesses. In fact, extensive network connectivity is one of the major reasons why so many companies choose colocation over building their own server facility. Apart from renting space to house additional servers, they need to lay down new cable in order to connect their facility to service providers. All this places a disproportionately high burden on their budget. Plus, there is always a risk of vendor lock-in if the number of providers is limited.

In a colocation facility, you have multiple ISPs (internet service providers) and cloud platforms to choose from, so you can easily build an infrastructure that meets your specific requirements. You can optimise workloads for enhanced speed and functionality owing to the presence of multi-cloud architecture and cross-connections.

Can you think of any other growth drivers of colocation? Let us know in the comment section.

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