Tata Communications Sees Data Center Growth

The global financial crisis has placed a premium on balance sheet strength, especially in the capital-intensive data center and IT outsourcing business. One international provider that sees opportunity in this environment is Tata Communications, the telecom and hosting arm of the Tata Group, an India-based business conglomerate.

Tata Communications is in the midst of a global expansion of its data center operations, which span 1 million square feet in 35 facilities, including data centers in the United States in New York, Santa Clara, central New Jersey, and Los Angeles. Tata Communications was previously known as Videsh Sanchar Nigam Limited (VSNL), and is the largest hosting and telcom provider in India. The company acquired a global submarine cable network with its 2004 acquisition of Tyco Global Network.

"Network services is our core business, but data center services is key growth area for us," said Abid Qadiri, Vice President for Global Managed Solutions for Tata Communications, who said the company has a solid foothold in colocation services and is expanding into managed hosting.

Tata executives say they believe current conditions are also creating data center acquisition opportunities for companies with financial strength. "We will definitely see some consolidation," said Qadiri . "We are right now looking at acquiring other data center assets. We have been approached by a number of data center companies. We know that there are a lot of people looking to be acquired."

Tata Communications is pursuing global growth, but continues to build new greenfield data center projects in its home base of India. The Broad Group recently reported that India's data center market will top $1 billion in revenues, and projects growth of 10 percent a year.

Tata Communications (TCL) is one of 62 business lines for the Tata Group, which employs 350,000 workers worldwide in companies including Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Tea and Indian Hotels. Tata's holdings include the Taj Mahal Hotel in Mumbai, which was badly damaged in the recent terror attacks.

Tata Communications executives say that having a parent company with resources is an advantage in the current economic crisis. "One of the things about Tata Group that is comforting to the customers we talk with is that we're part of a $64 billion company," said Greg Adgate, Director of Managed Service for Tata Communciations.

Adgate said the financial environment also may create opportunities as many large companies re-examine outsourcing their data center operations. "What's happening now is a deeper level of inspection and review that is looking at any and all options to eliminate cost," he said. "Banking and financials have traditionally not liked outsourcing. Now every one of them is looking to move these costs off their books."