Data services mart may reach Rs 10,000 cr

India's data centre services market is projected to reach nearly Rs 10,000 crore (Rs 100 billion) by the end of 2011, a compounded annual growth rate of 22.7 per cent over the two-year period 2009-2011, according to research and advisory firm IDC India.

The overall India data centre services market is estimated at Rs 6,300 crore (Rs 63 billion) in 2009, an IDC India report said.

The fast evolving ecosystem comprising high speed internet bandwidth service providers, data centre hosting players, power and cooling solution providers, hardware vendors and system integrators would spur this growth over the next two years, it said.

The key verticals that contributed nearly 80 per cent of third party data centre services revenue in 2009, were manufacturing and IT/ITeS, with the third party data centres constituting about 18 per cent of the total revenues.

Captive data centres ('captives') would grow at a CAGR of 19.9 per cent in 2009-11, with manufacturing and banking, financial services and insurance (BFSI) showing high deployment. Demand from the government sector is expected to pick up in 2010 and beyond.

"Third party data centre services are gaining traction with enterprise customers due to lack of in-house skills, high investments and long gestation period that a data centre calls for", said Ravikant Sharma, Senior Analyst, User Research, IDC India.

"As the economy further strengthens in 2011 and IT adoption in SMBs increases further to achieve business growth objectives, this segment is expected to become the next growth driver for third party data centre services', he added.

However, customers would increasingly look for better technical skills and want to close the gap between commitment and delivery. Captives are being favoured in sectors involving high degree of security, internal controls and tighter management.

With bandwidth costs coming down significantly, data centre hosting in India is set to become cheaper. And with heightened interest in implementation of technologies like cloud computing and grid computing in data centres, the India market is expected to be a long term growth opportunity. India is all set to emerge as an important data centre hub of the world.