Introduction: The Next Frontier for Data Centres in India

India’s digital transformation is accelerating at an unprecedented pace, fueled by the exponential growth of data consumption, cloud adoption, and a thriving digital economy. While metropolitan hubs like Mumbai, Bengaluru, and Delhi NCR have long been the epicentres of data centre activity, a transformative shift is underway. Tier II and Tier III cities are rapidly emerging as the new hotspots for inland data centre development, driven by a confluence of regulatory, economic, and technological factors.

This article delves into the rise of inland data centres in India, referencing the comprehensive analysis from Communications Today, recent research, and the unique perspective of Han Digital—a leader in talent market intelligence and senior leadership engagement for global capability centres (GCCs) and professional services organizations.

Why Tier II and Tier III Cities? The Strategic Shift

India’s digital infrastructure landscape is evolving. According to the Communications Today June 2024 report, the data centre industry is witnessing a paradigm shift towards inland cities such as Pune, Hyderabad, Chennai, Ahmedabad, and even further into cities like Coimbatore, Indore, and Jaipur. Several key drivers are catalyzing this movement:

• Proximity to End Users: As digital services penetrate deeper into India’s hinterlands, data centres in Tier II/III cities reduce latency and enhance user experience.
• Regulatory Incentives: State governments are rolling out attractive policies, including land subsidies, power tariff concessions, and single-window clearances.
• Cost Advantages: Lower real estate and operational costs compared to metros.
• Disaster Recovery & Business Continuity: Inland locations offer resilience against coastal risks such as flooding and cyclones.
• Talent Availability: The rise of engineering colleges and technical universities in smaller cities is creating a robust talent pipeline.

Recent research by JLL India (H2 2023) and Knight Frank (2024) confirms that non-metro cities are expected to contribute over 30% of new data centre capacity by 2026, up from less than 10% in 2022.

The Impact on Global Capability Centres (GCCs) and Professional Services

For global capability centres and professional services companies, the inland data centre boom is a game-changer. Here’s why:

• Enhanced Business Continuity: Inland data centres provide redundancy and disaster recovery options, critical for uninterrupted operations.
• Regulatory Compliance: Local data residency and sovereignty laws are easier to comply with when data is stored within India’s borders, especially in strategic locations away from high-risk zones.
• Cost Optimization: Lower operational costs enable GCCs to allocate more resources to innovation and digital transformation.
• Talent Accessibility: Proximity to emerging talent pools in Tier II/III cities supports the scaling of IT, cybersecurity, and data management teams.
• Client Proximity: Serving clients in diverse geographies becomes easier with distributed infrastructure, reducing latency and improving service delivery.

According to NASSCOM’s 2024 GCC Trends Report, over 60% of new GCCs established in the last year have considered locations beyond traditional metros, citing improved infrastructure and talent as key factors.

Key Growth Hubs: Inland Data Centre Hotspots

The inland data centre revolution is not limited to a handful of cities. Here are some of the most promising Tier II/III hubs:

• Pune: With robust IT talent and proximity to Mumbai, Pune is a preferred choice for data centre expansion.
• Hyderabad: State support and a burgeoning tech ecosystem make Hyderabad a major inland data centre hub.
• Chennai: While coastal, its inland suburbs are seeing significant data centre investments, offering a blend of connectivity and resilience.
• Ahmedabad: Strategic location and government incentives are attracting hyperscalers and colocation providers.
• Coimbatore, Indore, Jaipur: These cities are emerging as dark horses, offering cost-effective, reliable power and a growing skilled workforce.

As per Communications Today, the next wave of data centre investments is expected to be split almost evenly between metros and non-metros by 2027.

Challenges and Opportunities: What Professional Services Companies Need to Know

While the inland data centre surge presents immense opportunities, it also brings unique challenges that professional services and GCCs must navigate:

1. Infrastructure Readiness

Power availability, network connectivity, and physical security are critical. While many Tier II/III cities are catching up, thorough due diligence is essential before committing to a location.

2. Talent Acquisition and Retention

Attracting and retaining top talent in smaller cities requires a nuanced approach. Han Digital’s research indicates that while the talent pool is expanding, competition for skilled data centre professionals is intensifying. Companies must invest in training, employer branding, and local partnerships.

3. Regulatory Navigation

Each state has its own policies and incentives. Professional services firms must stay abreast of evolving regulations to maximize benefits.

4. Sustainability and Green Data Centres

With ESG (Environmental, Social, Governance) mandates gaining traction globally, inland data centres must prioritize renewable energy, efficient cooling, and sustainable practices. According to Deloitte India (2024), green data centre certifications are becoming a key differentiator for GCCs and their clients.

Han Digital: Bridging the Talent Gap for Data Centre Expansion

Han Digital stands at the forefront of India’s talent market, offering unparalleled insights and connections for organizations seeking to establish or expand their data centre and GCC footprint in Tier II/III cities.

• Deep Talent Market Intelligence: Han Digital’s proprietary research tracks the availability, skillsets, and compensation trends for data centre professionals across India’s emerging hubs.
• Leadership Networks: Decades of engagement with senior leadership in technology, digital infrastructure, and professional services enable Han Digital to facilitate strategic hiring and leadership placements.
• Customized Talent Solutions: From workforce planning to employer branding, Han Digital tailors solutions for each client’s unique needs—whether building a new data centre team or scaling an existing GCC.
• Local Partnerships: Han Digital’s on-ground presence in multiple Tier II/III cities ensures access to local talent pools, training institutes, and regulatory bodies.

As the inland data centre market matures, Han Digital’s expertise is pivotal for professional services companies looking to de-risk their expansion, accelerate hiring, and build high-performance teams in new geographies.

Case Studies: Inland Data Centre Expansion in Action

Several leading organizations have already capitalized on the inland data centre trend:

• Global IT Services Firm: Leveraged Han Digital’s talent mapping to establish a 500-member data centre operations team in Pune, reducing time-to-hire by 40%.
• Financial Services GCC: Partnered with Han Digital to identify and onboard senior leadership for a new disaster recovery facility in Hyderabad, ensuring regulatory compliance and operational excellence.
• Cloud Solutions Provider: Used Han Digital’s local partnerships to build a sustainable, green data centre in Coimbatore, tapping into fresh engineering talent from local universities.

Future Outlook: Data Centres in India’s Digital Decade

The inland data centre boom is set to redefine India’s digital infrastructure landscape by 2025 and beyond. Key trends to watch include:

• Hyperscaler Investments: Global cloud giants are increasingly choosing non-metro locations for new campuses, driven by cost, talent, and regulatory factors.
• Edge Computing: As IoT and real-time applications proliferate, edge data centres in Tier II/III cities will become critical for low-latency processing.
• AI and Automation: Demand for AI-ready data centres is rising, requiring new skillsets and advanced infrastructure.
• Sustainability: Green data centres will be the norm, with a focus on renewable energy and efficient design.

For professional services companies and GCCs, the inland data centre revolution is both an opportunity and an imperative. Success will hinge on strategic location selection, regulatory agility, and—most importantly—access to the right talent.

How Han Digital Can Help Your Data Centre and GCC Strategy

If you’re a professional services firm or a global capability centre planning to establish or expand inland data centre operations in India, Han Digital offers a unique blend of market intelligence, talent solutions, and leadership connections:

• Market Mapping: Detailed insights on talent availability, compensation, and competition in emerging data centre hubs.
• Leadership Hiring: Access to a curated network of senior leaders with deep experience in digital infrastructure, operations, and compliance.
• Workforce Planning: End-to-end support in building high-performance teams, from entry-level engineers to seasoned data centre managers.
• Regulatory Guidance: Partnerships with local authorities to navigate state-specific policies and incentives.
• Employer Branding: Strategies to position your organization as an employer of choice in new geographies.

With a proven track record and a finger on the pulse of India’s evolving talent landscape, Han Digital is your trusted partner for data centre and GCC success in Tier II and beyond.

Conclusion: Embracing the Inland Data Centre Revolution

The rise of inland data centres in India marks a pivotal shift in the country’s digital journey. For professional services companies and global capability centres, this is a moment of both challenge and immense opportunity. By leveraging the right talent, strategic partnerships, and expert guidance from organizations like Han Digital, businesses can unlock new growth, resilience, and innovation in the heart of India’s emerging cities.

To learn more about how Han Digital can support your inland data centre or GCC expansion, contact our experts today.