NTT's Indian Data Centre Business: Thriving At 40% CAGR

The Indian data centre market is witnessing unprecedented growth, and NTT has emerged as a key player in this landscape. Under the leadership of Shekhar Sharma, CEO & Managing Director of NTT Global Data Centres & Cloud Infrastructure India, the company’s Indian data centre business has experienced remarkable growth, boasting a Compound Annual Growth Rate (CAGR) of over 40 per cent over the last 2-3 years. 

This impressive figure stands in stark contrast to the industry's average CAGR of 15-20 per cent, highlighting NTT's strong presence and success in the Indian data centre market, said Sharma speaking with BW Businessworld.

Growth And Success

With the addition of the Chennai 2 Data Centre campus recently, NTT now operates 16 data centre facilities across India, covering more than 3.1 million sq. ft. (288,104.09 m2) and boasting a remarkable 205 MW of IT power. This extensive data centre network enables NTT to cater to the growing demand for data storage and processing capabilities, fueled by the rapid adoption of digital technologies and online services across various sectors in India.

Bangalore and Chennai are integral to NTT's data centre business in India. When NTT entered India, it had four target cities: Mumbai, Bangalore, Chennai, and Delhi. Mumbai has seen significant growth due to various factors like industries, banking, network, power availability, and favourable policies. While Bangalore's growth is also evident, Mumbai's hypergrowth has surpassed it, said Sharma. Meanwhile, Chennai remains crucial for NTT due to its proximity to APAC and its significant industrial presence. These three cities, along with Mumbai and Delhi, remain key hubs for NTT's data centre operations in India.

While Bangalore's growth is also evident, Mumbai's hypergrowth has surpassed it, said Sharma.

NTT's success in the Indian market is not limited to its robust infrastructure and cutting-edge solutions but also extends to its strong presence in various industries. NTT has been witnessing traction in industries such as BFSI, ecommerce, fintech, and online services, where data centre services are critical for ensuring seamless and secure operations. As businesses increasingly rely on cloud-based solutions, artificial intelligence, and machine learning, Sharma said NTT's data centres offer the scalability and reliability required to support their digital ambitions.

The recent launch of the MIST subsea cable system has further strengthened NTT's position as a leading data centre provider in India. Constructed by consortium members including NTT Communications India Network Service Pte. Ltd. and Orient Link Pte. Ltd., the MIST cable system spans 8,100 km, connecting Malaysia, India, Singapore, and Thailand. It represents India's first cable landing of a 12-fibre pair capacity, capable of carrying more than 200 Tbps of data. This enhanced connectivity paves the way for increased data exchange and seamless communication across the region.

According to reports from earlier this year, NTT has outlined plans to invest Rs 2,000 crore in a hyperscale data centre in Kolkata over the next few years. This is part of the ongoing USD 2.5 billion total investment plan in India by NTT, which was announced about two years ago. The company is also investing to develop data centres in Mumbai, Thane, Pune, and Nagpur, with the project expected to generate 1,500 jobs across all four sites.

According to a report by Nikkei, NTT has already invested more than USD 800 million in India during the combined period of 2021 and 2022. In January, the company reaffirmed its commitment to the Indian market, pledging an annual investment of USD 500 million in the coming years, emphasising India as a crucial foreign market within the Asian region.

On a global scale, NTT had unveiled ambitious plans to invest 8 trillion yen (USD 59 billion) in the next five years, targeting data centres, artificial intelligence, and other promising growth sectors. A significant portion, at least 1.5 trillion yen (USD 11 billion), will be allocated to expand or upgrade its data centre infrastructure.

Tier 2 And Edge Data Centres

In the evolving landscape of data centres, Tier 2 cities have gained significance, presenting new opportunities for NTT. As per Sharma, earlier, important data resided outside India, but with technological advancements and data localisation, the demand for data centres in India surged. Major cities like Mumbai and Bangalore witnessed a surge in large data centres due to 5G and content distribution. However, the growing need to bring data closer to customers, especially with 5G's advent, is leading to the emergence of smaller data centres, known as edge data centres, in Tier 2 cities. 

"We anticipate data centres moving towards smaller cities, which we call edge data centres. There's no clear definition of what an edge means, but it entails having data closer to customers within their cities. There is a rising demand for this, and as NTT, we aim to be at the forefront in addressing and understanding this trend. We strive to be pioneers in providing efficient services for customers in these cities, which is why the concept of edge data centres is significant for us," said Sharma.

Indian Data Centre Market 

Looking ahead, NTT's growth trajectory in India remains positive, aligning with the country's burgeoning data centre market. According to ICRA, India could witness data centre capacity reaching 4,900-5,000 MW in the next six years, involving investments of about Rs 1.50 lakh crore. The data centre sector is expected to witness a remarkable six-fold increase in capacities during this period, with key cities like Mumbai, Hyderabad, and the NCR accounting for 70-75 per cent of the installed data centre capacity.

"Looking at the Indian data centre market, it is evident that there is tremendous growth potential in the coming years. As of today, India has around 800+ MW of data centre capacity that is already operational. However, based on reports and projections, I believe that in the next year and a half to two years, this capacity is expected to double, reaching around 1.5 GW," said Sharma.

Nonetheless, Sharma said in contrast to more developed data centre markets such as the US, where prominent regions like Virginia alone possess a capacity of over 2 GW, it becomes clear that there is ample space for growth and expansion in India. The escalating demand for data centre services underscores a substantial need for data centre businesses to thrive in the country.