Big Interview

India’s young people drive growth in data centre industry

Sumit M STT GDC India.jpg

India rivals China for the biggest population in the world. Sumit Mukhija, CEO of data centre operator STT GDC India, tells Alan Burkitt-Gray how the company is expanding to meet demand

The worldwide population growth is at its slowest rate since 1950. Despite this, a United Nations report published in July says India’s population will reach 1.4 billion people next year. If true, it will take over China’s position as the country with the biggest population in the world. That is a huge opportunity for Sumit Mukhija.

Mukhija is the chief executive of the inelegantly named Singapore Technologies Telemedia Global Data Centres India. Even its abbreviation – STT GDC India – is a mouthful.

“Having the largest population is nothing to boast about,” says Mukhija. “But [India has] the youngest population in the world [and] the 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-largest number of mobile users and internet users” behind China, but it has an advantage: “We have the lowest rates – lower than China.”

China has a global reputation as the land where everything is online, and where cash is scorned, even for cheap purchases, in favour of WeChat Pay and other digital wallets. But India is up there too, insists Mukhija. “There are government services, e-commerce and digital payments” in India, he says. “Business-to-business payments are on an upswing. All this is powered by the younger generation. We have more than 100 unicorns, even during the pandemic. And, of course, this all means more data to be archived and used, and more deployments.”

India has “so many use cases now”, he says, using Ola, India’s home-grown taxi-hailing service, as an example. Ola differs from Uber, he says, because “in India it’s a profession taken up by full-time drivers”. And the arrival of services like Ola drove the adoption of smartphones. “These drivers didn’t know how to use mobile phones, apart from making calls, before Ola. All of these guys suddenly became internet literate.”

 

 

Pandemic growth

The Covid-19 pandemic pushed mobile internet take-up further in India due to CoWIN, a government portal that allows people to book vaccinations. “We’re all supposed to use the app to get appointments,” Mukhija says. “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 this growth needs data centres to be built in a challenging environment. New Delhi – where Mukhija was when I interviewed him – has an average high of 33°C in May. But this May, the India Meteorological Department recorded a high of 49°C in the city.

“Since we know we have a harsh environment, we have to know what we’re doing,” says Mukhija. “Data centres are inherently very, very complex. We have to create a sustainable ecosystem that takes account of quality requirements and uptime requirements.”

But STT GDC India achieves this, he says. “100% [uptime] is the new normal. This is why it takes an ecosystem, including our shareholders, our employers and our suppliers. We have an environment that is always on.”

This “always on” service is specified in the company’s service-level agreements (SLAs), he says.

“When we sign SLAs with our customers, there are back-to-back SLAs with our suppliers. Our operations teams are active 24/7, and that means we have to keep our communications always on.”

There are other “very, very challenging” factors besides heat, including floods and air pollution, that data centre operators in India face that highlight what an achievement reaching 100% uptime is.

Operators “can’t use free-air cooling because of the pollution level”, Mukhija says, so must counter airborne dust with filters. But filters need power and that affects the power usage effectiveness of the data centres.

“We have to apply a greater amount of innovation when designing our facilities, and that’s been hard during the Covid restrictions on people moving,” he says. But despite this, he says the company’s data centre “are at par” with those of operators outside India. It’s what customers expect “As more and more customers go global, they expect the same SLAs.”

 

 

Candid and open-ended

Despite this level of service, Mukhija says some customers expect his company’s rates will be half of those in other parts of the world.

“They think our services will be inherently cheap, but they require a 100% SLA, with the best of quality and safety. We have candid and open-ended discussions,” he says, adding that the company “still has economies of scale” and the price of construction in India is “cost-effective”.

Mukhija candidly admits that there are other negatives to operating in India, besides the weather.

“The approval process [from national and local government] is slow,” he says, as it takes six to eight months to get approval for a new construction, before building even starts. “There’s acknowledgement of this by the government, and this is still evolving.”

Such changes can be seen in India’s states that “have rolled out new policies gives as examples Uttar Pradesh, east of New Delhi, Tamil Nadu, in the south-east, and Karnataka in the south-west as states that have done this. “They have been the leaders,” he says.

But he adds that problems remain. Some of these states’ policies “conflict with national policies” and “it takes some amount of time, months or years, to propagate [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 run power, registration of land, pollution control and so on.

Data centre people in the US and other parts of the world who juggle federal, state and county politicians may see similarities to Mukhija’s situation.

India is also more restrictive in its treatment of carriers.

“The government does not permit dark fibre, nor fibre linking two data centres without the involvement of a licensed carrier,” Mukhija explains. “We’re making noises through the Confederation of Indian Industry. Maybe in time they’ll let us connect our own data centres ourselves. “From an international perspective, the government can be very particular about who brings in a subsea cable, including where they land and how they regulate the data. But we can’t survive in an isolated world.”

India depends on subsea connections more than many other countries, as it has the Indian Ocean to the east and west, the Himalayas to the north, and China and Pakistan along two of its international borders.

Despite the problems the industry faces, Mukhija has reason for hope. “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 a handle around the policies, connectivity will not be the limiting factor.”

 

 

Growth in power

The business that is now STT GDC India had 40-45MW of data centre power in 2014, says Mukhija.

“The real growth came in 2016,” he says. This was while he was at Tata, which sold its data centre business to STT, which is owned by Temasek, Singapore’s sovereign wealth fund. Mukhija moved from being CEO of Tata’s unit to CEO of STT GDC India.

STT GDC owns data centres worldwide, including ones in China, Indonesia, Thailand and the UK. Virtus Data Centres is one of its brands.

“Now our IT load [in India] is more than 200MW, in nine cities with 21 facilities with more than three million square feet of floor area,” Mukhija says.

“We have a third of the market, the largest presence in purpose-built data centres, the largest footprint.” He says STT GDC India will double capacity every four to five years during the next 10-15 years:

“By 2027, we expect to double capacity to 400MW.” Mukhija says that “about 36%” of the company’s energy comes from renewable sources right now, but the group expects “this to be 40% this year” and is “pledged to be carbon-neutral by 2030”. That’s not just STT GDC India, but the whole group, he clarifies.

The Indian market is growing at an annual rate of 20-25%, he adds, boosted by “a lot of new players, including global players. And we ourselves are global.” But he notes that some newcomers are “power generation companies and real estate companies that have come into the market”, lacking industry knowledge.

“Power companies say that 40-50% of the cost of a data centre is power,” he says. “The problem is that they don’t understand data centres. You can’t just hire 20 people. It takes years to build up experience.”

 

 

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