Nexus of Cloud and Colocation

Many people have asked us, i.e. will the exponential growth of cloud services in India hurt the colocation business. The question arises because colocation & cloud may seem like a battle of opposition, but in reality, they go hand and hand. Let us understand how.

Over the last few years, enterprises have chosen a mix of infrastructure solutions that include cloud and colocation deployments. As far as the colocation business goes, it is divided into two segments, hyperscalers and retail. Most Cloud Service Providers (CSPs) come under the hyperscalers category.

In fact, till now, the retail business (enterprise) has been the more significant contributor. But this would change as we go forward with hyperscalers garnering the lion's share. The colocation business growth is strongly linked with how the cloud business performs in India since most of these CSPs are housed in these colocation spaces.

Hence, the demand for colocation services (CAGR in the mid-20s) can be attributed to rapid growth in the hyperscaler market (CAGR in the mid-30s).

The colocation business has all the signs of being a sunrise sector where demand seems to outstrip supply. Therefore, the DC market will continue to attract a lot of investment for new capacity built up from the supply side. We have seen a steady influx of foreign players and investors showing interest in this sector, and with the newly found infrastructure status, things can only become better.