India emerging as global hub for data hosting services

By Fakir Balaji, Mumbai/Bangalore, Aug 5 : Convergence of technologies, domain expertise and falling bandwidth tariffs are making India a hot data hosting and remote infrastructure management (RIM) site for global enterprises, says a top industry player.

For the next wave of outsourcing in back office operations, top Indian players such as Reliance Infocomm, Tata Telecommunications, Sify and Netmagic Solutions are bracing up to provide a range of IT managed services, including data hosting, mission critical applications, networking and RIM to domestic and overseas enterprises.

"India is not anymore a back office for software development and BPO (business process outsourcing) services alone. It is emerging as a preferred destination for global enterprises to host their network operations, mission critical applications and hundreds of servers," Netmagic founder and CEO Sharad Sanghi told IANS in a recent interview.

Competitive pricing, high quality service and a high talent level have enabled Indian data centres to vie with their global peers in managed hosting and RIM services to domestic and overseas customers in areas as diverse as financial services, telecom, logistics, manufacturing, IT/ITES (IT-enabled services), retail, media and entertainment and online brokerage.

"A paradigm shift is taking place in the IT infrastructure management services, especially in the back end. Convergence of ICT (information and communication technologies), real time trading/transactions in financial and commodity markets, media and entertainment such as gaming and content development are compelling Indian and global enterprises such as IBM, HCL, Wipro, Infosys and TCS to look for third party vendors like ours or captive vendors," Sanghi pointed out.

As in the case of IT and BPO services, global firms from Europe and the US are looking at India for managing their data, servers, carriers, and even disaster recovery operations.

Reliability, data protection and security have made Indian and overseas enterprises relocate their data facilities, including servers, storage devices and remote IT infrastructure to India-based service providers. Internet firms and web portals such as Rediff.com and Indiainfoline.com are among them.

For instance, Netmagic remotely monitors from its data centre in Mumbai the entire network operation (switches) of the US-based Virtela Communications, which offers VPN (virtual private network) services in over 100 countries.

Similarly, WorldSpace satellite radio has outsourced its data operations to Netmagic, which has unveiled its largest data centre in Mumbai recently.

Likewise, India FM, which provides Bollywood content to its listeners in the US, hosts its servers and carriers at Netmagic data centre in Mumbai and its virtual data centre at Sunnyvale in California. So also Sugam Solutions, which is hosted in India and the US.

On the domestic front, the phenomenal growth of Indian enterprises across verticals has necessitated the creation of third party data centres as server farms and disaster recovery sites for serving their customers and constituents on 24x7x365 basis.

Huge business potential in operating captive data centres has prompted IT bellwethers such as TCS, Infosys, Wipro and HCL to offer managed hosting and RIM services to their global clients as part of their cross-selling.

"Post 9/11, the need to protect/secure data with 100 percent redundancy made global enterprises either set up their captive facilities in the subcontinent or outsource them to Indian third-party vendors," Sanghi recalled.

"The setting up of captive back offices by multinationals to service global customers led to the emergence of Indian data centres for hosting and managing their mission critical applications and networking operations."

The opening of India offices by foreign institutional investors (FIIs), investment banks and global marketing/research firms has also created huge demand for data centres.

Similarly, the telecom revolution and proliferation of mobile and Internet/web services, spanning voice, data and video, have created opportunities for pure players such as Netmagic to expand capacity and open data centres in other locations such as Bangalore and plan more centres in Chennai, Delhi and Hyderabad.

"Earlier, enterprises preferred data centres to be nearby, to see, touch and feel secure. Firewalls, security solutions and filters have ensured data centres can be location neutral or even remote," Sanghi noted.

"Enterprises are realising there are tangible benefits in outsourcing their data requirements to third parties, which alleviate risks posed by security breach, theft and man-made disasters like 9/11 or natural disasters such as earthquakes, floods and so on."

Even Indian enterprises, which want to focus on their core competency, are increasingly outsourcing their data operations to third party vendors, as investment in space, equipment, energy and hiring/training people to run data centres and disaster recovery sites are very expensive.

"We see robust demand for captive as well as third party data centres in the subcontinent due to increasing technology infusion in diverse verticals, migration of services and upgradation from legacy systems," Sanghi added.

"Though market research firm IDC has estimated the Indian data centre market size to be about USD 150 million, we see a huge potential to double and triple the market over the next three-five years."