Indian youths drive growth in data center industry
Global population growth is at its slowest pace since 1950. Despite this, a United Nations report released in July said India’s population will reach 1.4 billion people next year. If true, it will replace China’s position as the most populous country in the world. This is a huge opportunity for Sumit Mukhija.
Mukhija is the managing director of the inelegantly named Singapore Technologies Telemedia Global Data Centers India. Even its abbreviation – STT GDC India – is a mouthful.
“It’s nothing to brag about having the largest population,” says Mukhija. “But [India has] the youngest population in the world [and] largest number of social media users,” he adds, placing India “in the top three” of users of services such as Facebook, LinkedIn and Twitter.
India also has “the second highest number of mobile users and internet users” behind China, but it has an advantage: “We have the lowest tariffs – lower than China”.
China has a global reputation as the country where everything is online and money is looked down upon, even for cheap purchases, in favor of WeChat Pay and other digital wallets. But India is there too, insists Mukhija. “There are government services, e-commerce and digital payments” in India, he says. “Business-to-business payments are booming. All of this is fueled by the younger generation. We have over 100 unicorns, even during the pandemic. And, of course, all of that means more data to archive and use, and more deployments. »
India has “so many use cases now,” he says, using Ola, India’s taxi service, as an example. Ola differs from Uber, he says, because “in India, it’s a job done by full-time drivers.” And the arrival of services like Ola has led to the adoption of smartphones. “These drivers did not know how to use mobile phones, apart from making calls, before Ola. All of these guys suddenly became internet literate.
The Covid-19 pandemic has pushed mobile internet adoption further in India thanks to CoWIN, a government portal that allows people to book vaccinations. “We’re all supposed to use the app to get appointments,” says Mukhija. “I used it myself. But millions of others had never used an app.
He says this use case is “an example of inclusion, brought about by digital means.” “People just want to get vaccinated.” Incidentally, CoWIN is pronounced “covin” by people in India – a pun on the word “win”.
All of this growth requires data centers to be built in a harsh environment. New Delhi – where Mukhija was when I interviewed him – has an average high of 33°C in May. But last May, the Indian Meteorological Service recorded a maximum of 49°C in the city.
“Since we know we live in a difficult environment, we need to know what we are doing,” says Mukhija. “Data centers are inherently very, very complex. We must create a sustainable ecosystem that takes into account quality requirements and availability requirements. »
But STT GDC India is succeeding, he says. “100% [uptime] is the new normal. This is why we need an ecosystem, including our shareholders, our employers and our suppliers. We have an environment that is always active.
This “always on” service is specified in the company’s service level agreements (SLAs), he says.
“When we sign service level agreements with our customers, there are consecutive service level agreements with our suppliers. Our operational teams are active 24 hours a day, 7 days a week, which means that we must maintain our communications at all times.
There are other “very, very difficult” factors besides heat, including flooding and air pollution, that data center operators in India are facing that highlight what is a success reaching 100% availability.
Operators “cannot use open-air cooling due to the level of pollution,” says Mukhija, so they have to tackle airborne dust with filters. But filters need power and this affects the efficiency of data center power usage.
“We need to apply a greater amount of innovation when designing our facilities, and that has been difficult during the Covid restrictions on the movement of people,” he says. But despite this, he says the company’s data centers “are on par” with those of carriers outside India. This is what customers expect “As more and more customers go global, they expect the same SLAs.”
Frank and open
Despite this level of service, Mukhija says some customers expect his company’s rates to be half of those charged in other parts of the world.
“They think our services will be inherently cheap, but they demand a 100% SLA, with the best in quality and security. We have frank and open discussions,” he says, adding that the company “still has economies of scale” and that the price of construction in India is “profitable”.
Mukhija candidly admits that there are other downsides to operating in India besides the weather.
“The approval process [from national and local government] is slow,” he says, because it takes six to eight months to get approval for new construction, before construction even begins. “There is a recognition of that by the government, and that continues to evolve.”
Such changes can be seen in Indian states that “have rolled out new policies, giving as examples Uttar Pradesh, east of New Delhi, Tamil Nadu, in the southeast, and Karnataka in the southeast. west as states that did. “They were the leaders,” he says.
But he adds that problems remain. Some of the policies of these states “conflict with national policies” and “take time, months or years, to spread. [new rules] through the system”.
There is also a lack of coordination between different parts of the public sector, he says. Mukhija says he still has to deal with “completely different” authorities that handle electricity, land registration, pollution control, and more.
People in data centers in the United States and other parts of the world who juggle federal, state, and county politicians can see similarities to Mukhija’s situation.
India is also more restrictive in its treatment of carriers.
“The government does not allow dark fiber, or fiber connecting two data centers without the involvement of a licensed operator,” says Mukhija. “We make noise through the Confederation of Indian Industry. Maybe in time they will let us connect our own data centers ourselves. “From an international perspective, the government can be very particular about who brings in an undersea cable, including where it lands and how it regulates data. But we cannot survive in an isolated world.
India depends on undersea connections more than many other countries, as it has the Indian Ocean to its east and west, the Himalayas to its north, and China and Pakistan along two of its international borders.
Despite the problems facing the industry, Mukhija has reason to be hopeful. “The growth of a market lies in [India’s] young population,” he says, implying that their desire for international connectivity will have a positive influence. “If the government can get the policy under control, connectivity won’t be the limiting factor.”
The company now called STT GDC India had 40 to 45 MW of data center power in 2014, Mukhija says.
“The real growth came in 2016,” he says. That was while he was at Tata, which sold its data center business to STT, which is owned by Temasek, Singapore’s sovereign wealth fund. Mukhija rose from the position of CEO of Tata’s unit to CEO of STT GDC India.
STT GDC has data centers around the world, including China, Indonesia, Thailand and the UK. Virtus Data Centers is one of its brands.
“Now our IT load [in India] is over 200 MW, in nine cities with 21 facilities with over three million square feet of floor space,” says Mukhija.
“We have a third of the market, the largest presence in purpose-built data centers, the largest footprint.” He says that STT GDC India will double its capacity every four to five years over the next 10 to 15 years:
“By 2027, we plan to double the capacity to 400 MW.” Mukhija says “around 36%” of the company’s energy currently comes from renewable sources, but the group expects “it will be 40% this year” and is “committed to being carbon neutral”. carbon by 2030″. It’s not just STT GDC India, but the whole group, he says.
The Indian market is growing at an annual rate of 20-25%, he adds, driven by “a lot of new players, including global players. And we are global ourselves. But he notes that some newcomers are “power generation companies and real estate companies that have come into the market”, lacking knowledge of the sector.
“Electric companies say 40-50% of the cost of a data center is electricity,” he says. “The problem is that they don’t understand data centers. You can’t just hire 20 people. It takes years to gain experience.