India’s attractiveness as a data centre destination lies in its large market size and potential for economic growth: Manoj Paul, MD, Equinix India

The interview with Manoj Paul, Managing Director, Equinix India, conducted by Express Computer, delves into the evolving landscape of hybrid working, technological advancements such as AI, Equinix’s strategic initiatives, and the burgeoning data centre industry in India. Manoj shares insights on Equinix’s approach to addressing the challenges and opportunities presented by these trends, highlighting the importance of flexibility, reliability, and collaboration in navigating the digital transformation journey. He also sheds light on Equinix’s expansion plans, partnerships, and the company’s commitment to providing value-driven solutions to its customers.

Tell us briefly about Equinix’s growth story and focus in recent times?

At Equinix, we hold firm to the belief that we must empower enterprises to mature on their digital journey. This journey isn’t solely about migrating everything to the cloud to be perceived as a digital leader. We’ve observed numerous organisations receiving top-down mandates to transition entirely to the cloud, but we recognise that this might not always be the optimal approach. Instead, at Equinix, we advocate for a digital path that offers the flexibility to leverage all available resources within your ecosystem, including partnerships and interconnections.

Flexibility is paramount, alongside reliability and the assurance of long-term support from a reputable and financially stable provider. When committing to a data centre for a decade or more, partnering with a trustworthy provider becomes imperative, especially considering past instances in India where data centre service providers ceased operations, leaving customers scrambling to migrate. This is where Equinix excels, wherein we stand as a global industry leader with over US$8 billion in revenue in 2023, marking 21 consecutive years of growth. With a market capitalisation of US$84 billion as of February 2024, we serve over 10,000 customers across 260 data centres in 71 metros and 33 countries, ensuring a global reach that instil confidence in enterprises seeking reliable colocation services.

In today’s landscape, the repercussions of data centre outages, even for just an hour, can be severe, particularly for critical services. Our quarter-century track record of providing data centre services worldwide should reassure customers of our reliability. However, as technology evolves, priorities shift. Consider the evolution of phones—once voice quality was paramount, but now it’s taken for granted, with the focus shifting to the ecosystem, apps, security, and flexibility. Similarly, Equinix aims to deliver agility to our enterprise customers, recognising their need for flexibility and uncertainty about future needs.

Many enterprises express uncertainty about their future requirements and the challenges of committing to capital expenditures. To address these concerns, we offer a range of services designed to provide flexibility and scalability, including Equinix Metal, our recently launched bare metal as a service solution in India. Additionally, we recognise that not all workloads are suited for the cloud, leading to the rise of hybrid multi cloud infrastructures. Equinix stands ready to support enterprises with the infrastructure and services they need to navigate the complexities of their digital transformation journey.

Furthermore, we offer a product called Equinix Fabric, which facilitates connectivity to cloud service providers. Users can connect to Fabric, either from within the data centre by taking a cross-connect, and these cross-connects can range from 10G to 100G. Users can begin with minimal bandwidth like 500MB or 1G and easily scale up to 10G through our portal. This flexibility empowers enterprises, ensuring that bandwidth constraints don’t hinder their operations. Unlike traditional setups where upgrading bandwidth involves lengthy processes and contracts, our solution allows users to adjust bandwidth levels on their own through the portal, instantly meeting fluctuating demands.

For instance, consider a scenario where a company needs to retrieve massive amounts of data from their cloud disaster recovery setup due to primary storage failure. With our solution, they can quickly scale up bandwidth to meet this temporary demand, such as upgrading from 500MB to 10G for 15 days, and then revert back once the task is completed. This agility ensures efficient data management and business continuity.

Most of our data centres worldwide are interconnected via the Equinix platform and network Fabric. This interconnectedness enables seamless expansion and deployment of services across regions. Companies can easily establish connectivity and deploy servers in distant locations without the hassle of individually engaging with carriers for connectivity, streamlining their operations and enabling faster time-to-market for their services.

By offering such infrastructure and connectivity solutions, we alleviate concerns regarding infrastructure availability, ensuring businesses can launch and scale their services as needed without being impeded by connectivity or infrastructure limitations.

Are the frequent announcements of new services and partnerships by your organisation and others driven by a fear of missing out on opportunities, or is there genuine receptiveness from enterprises for these technologies?

Now the difference that we have over others is that we are a pan-world organisation, wherein we are catering to customers not only in India, but across the world.

We have introduced several services in India, starting with Fabric, followed by Internet Access, Internet Exchange, Network Edge, and most recently, Metal. While these services have been successfully launched and adopted in other parts of the world over the years, their introduction in India occurred in quick succession. This is because Equinix entered the Indian market only two years ago after obtaining the necessary licences.

The licence-based nature of our services in India has contributed to the timing of these announcements. However, it is important to note that these services have already gained traction and we have customers utilising them in India. Additionally, our leadership position in the industry has made Equinix an attractive partner for many players who want to reach out to customers. This is evident in our recent partnerships, including the one with NVIDIA and others.

The advantage we have at Equinix is that being a leader in the industry, we are sought after by various players who wish to collaborate with us in order to connect with customers effectively. This trend highlights the trust and reputation we have built, making Equinix a preferred partner for many organisations.

NVIDIA collaborated with us on a global scale, along with a few other cloud service providers, to enable us to cater to enterprises. While cloud service providers offer their own cloud solutions, NVIDIA recognised the need for a partner like Equinix to address enterprise customers who want to build their AI models with data security and customisation in mind. Equinix’s extensive network of 260 data centers across various metropolitan areas made us an ideal partner for this purpose.

Equinix offers NVIDIA DGX chipsets and micro hyper computing solutions, along with NVIDIA’s networking platform and software, combined with the necessary space, power, and infrastructure. This allows enterprises to deploy AI models anywhere they require, while ensuring proximity to their customers and maintaining control over their data. This partnership with NVIDIA is specifically tailored for enterprises with smaller AI requirements. While the implementation may seem rapid in India, it has been sequenced and executed successfully in other parts of the world. Equinix, being a large organisation, has dedicated teams focusing on different aspects of this partnership.

It is important to note that not all customers are currently interested in AI, and that is perfectly fine. However, for those who are, Equinix aims to be at the forefront by providing them with the necessary infrastructure, learning from their experiences, and expanding our offerings accordingly.

How about your presence in the Indian market?

We are actively expanding our data centre infrastructure to meet the growing demands in various locations. We have recently launched MB4, and we are currently preparing for the completion of MB3, which was announced earlier and is expected to be ready by the end of this year. The civil construction work in Chandivali has been completed, and we are now focusing on other aspects of the project. In Chennai, our data centre is nearing completion, and we anticipate it will be ready by the end of the year as well.

In addition to Mumbai and Chennai, we have plans for another new data centre in Mumbai, which is currently in progress. We are also exploring opportunities in a couple of other metros, and we will make announcements regarding those expansions soon. As we finalise land deals and progress with the development, you can expect further updates from us.

Our expansion efforts encompass both the speed of rollout and the introduction of new services. These data centres are designed to have significant capacities, catering to the needs of retail customers as well as hyperscale requirements. We are committed to providing robust infrastructure to support the increasing demands of businesses in these regions.

Is there enough room for all operators, including both homegrown companies and those entering the Indian market like Equinix, considering recent joint ventures and acquisitions, creating a fair playing field for all?

I would like to emphasise that in the data centre industry, there is currently enough demand for operators who provide value and instil confidence in their customers. However, it is possible that in the future, there may be a time when supply exceeds demand. During such periods, companies that offer exceptional value and differentiate themselves from others will likely thrive, while others may face challenges in acquiring customers.

As of now, the demand for data centres is higher than the supply, which is a positive situation. However, as the market matures, it will become increasingly important for companies to demonstrate their value proposition. Equinix aims to differentiate itself by providing added value to customers, even in times of potential oversupply. This commitment to delivering value will be a compelling reason for customers to choose Equinix.

It is worth noting that while Equinix’s capacity in India may still be relatively small compared to other regions like Europe, the demand for data centres in India remains strong. This indicates that there is still ample opportunity for growth in the Indian market. However, it is crucial to have the right proportions and be in the right location to effectively meet customer needs.

Do you believe there’s still significant ground to cover in terms of India’s position as a data centre hub, considering its current global ranking and the number of data centres compared to other countries?

When comparing India to countries like Australia, considering factors such as GDP and population, it is evident that India still has room for growth and expansion. As the Indian economy continues to develop, the data centre market will also experience growth. However, it is important to be cautious about some of the announcements made by certain operators. At Equinix, we only announce projects for which funding has been secured and investments are being made.

While there have been announcements about data centre developments in Gujarat and Kolkata, it is important to note that these markets are still in the early stages of growth. It will take time for them to mature and reach their full potential. During my discussions with OTT and other industry players in Hawaii, it became clear that certain regions will require time to develop.

However, India possesses several advantages that can enable it to become a global player in the data centre industry. For instance, India has a significant amount of power generation capacity, with 400G, including 100G from solar power. Currently, data centres only require around 1.5G, and even with projected growth, it may reach 3G in the next few years. Considering the overall power generation capacity, data centres’ energy needs represent a small portion, particularly as renewable energy sources like solar power continue to expand.

Definitely India has the potential to become a major player in the data centre industry, and Equinix is committed to investing in projects that are backed by funding and will contribute to the growth of the market.

India presents a unique opportunity to become a data centre hub, particularly due to its abundant renewable power generation capacity. Unlike many other countries, India has ample sunlight and space to generate renewable energy, making it an attractive destination for data centre operations that prioritise sustainability.

Also, India’s power generation capacity is substantial, and data centres can rely on renewable power sources to meet their energy needs. This is particularly advantageous as the cost of renewable power in India is currently one of the lowest in the world. Additionally, opting for renewable power ensures price stability for the next two decades, providing long-term assurance to data centre operators.

India’s connectivity is also expanding rapidly, with 18 undersea cables already in place and the addition of 4 to 6 new undersea cables on the horizon. This increased capacity allows for efficient data transfer between Europe, the US, Asia, and other regions, further enhancing India’s potential as a data centre hub.

Moreover, India’s manufacturing sector is already producing a significant amount of UPS systems, generators, transformers, and other equipment required for data centres. As the demand for data centres grows, these manufacturing capabilities will likely expand, enabling the development of larger facilities to cater to both domestic and international markets.

To fully realise this opportunity, it is crucial for the government and other stakeholders to collaborate and establish supportive policies that foster the growth of the data centre industry. By working together, India can leverage its advantages and position itself as a leading data centre hub, attracting both domestic and international investments.

Will the DPDP Act help the cause in any way?

I understand your perspective that the requirement for data centres in India is significant, particularly for banks, financial institutions, and other organisations that prefer to keep data within the country. This is driven by business requirements and the need to comply with regulations. Similarly, some OTTs and other companies have already established strong deployments in India to ensure seamless operations.

Over time, it is expected that more organisations will recognise the benefits of processing and hosting data in India. Rather than relying on regulations to enforce data localisation, it would be advantageous to build a proposition that demonstrates the business sense of processing Indian data in India. This approach would also extend to processing data from other regions in India, creating a favourable business environment.

India’s attractiveness as a data centre destination lies in its large market size and the potential for further economic growth. As the economy expands, the demand for data centres is likely to increase, making it a viable and lucrative market for businesses.

While the market size is a crucial factor, it is also important to consider the overall business landscape and ensure that the proposition aligns with the specific needs and requirements of organisations. By presenting India as an attractive business decision rather than a regulated one, the country can position itself as a preferred destination for data processing and hosting, leveraging its market potential and economic growth.

Do hyperscalers still remain the primary contributors in the current scenario, compared to the retail market or managed services offered as part of colocation services?

Globally, a significant portion of data centre capacity is consumed by hyperscale companies. This trend is not unique to India but is observed worldwide.

The dynamics of the data centre industry are indeed evolving, and the mix of demand from different sectors is subject to change. Currently, cloud service providers are experiencing strong demand as many enterprises are transitioning from on-premises infrastructure to the cloud. However, there is a growing realisation among enterprises that a complete migration to the cloud may not always be the most optimal solution.

As a result, we can expect to see a resurgence in demand from enterprises and the retail sector. While hyperscale companies are currently leading in AI deployments, there is a growing trend among enterprises to implement smaller-scale AI deployments for their specific data needs. This will contribute to the overall growth in demand for AI infrastructure.

The data centre industry will witness fluctuations in demand as hyperscalers and retail enterprises experience varying levels of growth. The initial surge in hyperscale demand may stabilise, while the retail sector expands its presence. Financial institutions, which are increasingly digitally enabled, and manufacturing companies that are embracing digital transformation are also driving demand for data centre infrastructure.

Additionally, there is a notable increase in demand from car manufacturing companies and other industries that are undergoing digitalisation efforts. These developments highlight the diverse range of sectors that are contributing to the growth and demand for data centre infrastructure.

Do you foresee a role for the partner ecosystem or channel play as you expand your footprint in the country? Are you currently engaged with the ecosystem in any capacity?

Absolutely. Equinix works with partners worldwide and we have a big portion of our business coming from partners. That’s the big strategy of Equinix because as a data centre service provider, you cannot be in front of the customer every day. After all, the data centre requirement comes once in a while, right? So that time you may not be present in front of the customer and you may not be top of the mind, but an IT service provider or even a telco, they see customers more often. We need to partner with them so that we can win the trust of the customer, get to know when the requirement comes up and bundle solutions with his services.

We have worldwide partnerships with HPE, Global, Dell and a few others, and even with some telcos like AT&T, Verizon and Telstra. Many of these partnerships have expanded to India and we are working very closely with all these partners because India is a very distributed country.

It is crucial for us to establish partnerships and provide added value to our customers. By offering a comprehensive solution, we aim to go beyond simply providing servers. We strive to be a one-stop solution where customers don’t have to seek separate services elsewhere. This value proposition is what sets us apart and makes us a trusted choice for our customers. When our customers choose Equinix, they can have confidence in their IT system integrator, knowing that we offer a holistic approach. We place great importance on our partnerships and recognise their significance in delivering exceptional service to our customers.

What roadmap have you set for this year?

I think AI and liquid cooling are exciting things and we will keep advancing in these directions. And, we are very well prepared because we are working with both our customers and partners. For AI, we have partnered with NVIDIA and for storage, we have entered into a partnership with NetApp.

We believe that the concept of ‘Everything-as-a-Service’ is going to be talked about in a bigger way. Moving from CapEx to OpEx, having the flexibility to demand, to take services on demand is going to be key and we are going to focus on this aspect.

We are also going to talk about how we will enable our Indian customers to go abroad and roll out services to other customers. If they are successful in India, they can always go out and roll out new services to their customers.