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India has milked its reputation of offering cheap IT labour for long but the reputation might be in danger tells us a study conducted by Cushman & Wakefield and Hurleypalmerflatt named ‘Data Centre Risk Index’ . The study evaluated “Data Centre Risk Index” i.e., the risks to global data centre facilities and international investment in business critical IT infrastructure.
In the survey, India scored an unsurprising second position in the most risk ridden Data Centre location among top 30 countries, the last being Brazil. The centre of global outsourcing over the past few years may not look so attractive anymore! This may be due to India’s low score in “Ease of Business”, “Inflation”, “per capita GDP” and “Corporate Tax”. The recent power grid collapse only adds to such a low ranking of India in the study.
Arvind Nandan, Executive Director, Consultancy, India, Cushman & Wakefield says, “India and key Asian economies remain preferred locations for DCs and have witnessed a growth in demand owing to various advantages. India offers the advantages of cost benefits and sustainability of operations. We would expect the growth to continue as this is also coupled with a rising domestic demand for IT services where internet and mobile communication penetration is still moderate. Investment by overseas players continues showing confidence in the future potential of India. At the same time it is important to put in place various initiatives for developing other areas such as energy, bandwidth, improving business environment, data protection laws, etc., which can enhance the proposition for India.”
More and more companies are looking towards the Nordic nations to locate their data centers as they offer renewable sources of energy. Another reason may be that the countries have been blessed by Boreas with cold weather which is favourable for data centers as they bring down the cooling costs of the data centers.
The US retains the top position in the ranking as the lowest risk location to set up a data centre and UK ranks second as these data centers have the good bandwidth, perform well in other tiers such as tier 1 risk categories, and have the largest percentage of their population completing tertiary education.
The safest place in Asia to setup a data centre is Hong Kong, the second being South Korea, ranking seventh and thirteenth respectively.
Stephen Whatling, Global Service Director at Hurleypalmerflatt, said: “Indonesia, India and Brazil are all considered growth markets, but with barriers to entry, regulated markets and high energy costs they do score poorly relative to the more established economic markets. Connectivity is also a problem but as these markets continue to be invested in and the infrastructure becomes more developed we would expect them to rise up the rankings.”
The Indian government will have to come up with better policies and reforms to make India a lucrative market again for major IT companies. Let us wait and watch what the Indian government does (rather let’s hope it does something) to revitalize the business critical IT infrastructure in India.