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Data Localisation: Importance Of Data Centers As an integral part of every enterprise, data centers are a virtual goldmine of information supporting business applications

By Manoj Dhanda

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Our country has emerged as one of the leading data generators lately. As per a report by Assocham-PwC, our data consumption would expectedly grow at 72.6 per cent by 2022. This rich data pool indicates how data has emerged as the new gold standard. The functioning of our digital economy entirely depends on data today. So, now a series of questions arise about where this data gets stored/managed and the many existing privacy concerns surrounding it. Our data is stored, organised, and processed in super-specialised facilities of networked computers, storage and other information technology equipment (namely data centers), located in areas free of natural disasters.

As an integral part of every enterprise, data centers are a virtual goldmine of information supporting business applications. They offer services, including data storage, backup and recovery, high-volume e-commerce transactions, productivity applications such as email, Big Data, machine learning and artificial intelligence.

Who uses data centers?

Businesses, organisations and other entities operating in the online space depend on data centers to organize, process, store and disseminate vast amounts of data. Scalable cloud servicing providers make data centers available across India and the world without restricting them by geographical borders. It signifies that these businesses/entities from anywhere in the world can leverage data center services (without visiting the facility physically) by paying a stipulated amount. Besides storage, consumers have developed a growing concern about data collection practices by businesses and their privacy concerns.

Data privacy concerns and how do enterprises protect data?

As per KPMG reports, data collection practices have eventually increased despite consumers' growing anxieties about data privacy. They are not just skeptical about data privacy issues; they are apprehensive about if their data is compromised, hacked, or sold to other parties. With the rising fears, many people do not intend to share private information with businesses. KPMG's survey states that 30 per cent of consumers shared that under no circumstances they would share their data with companies, while 12 per cent mentioned they would share data to make advertisements more relevant. Besides, 17 per cent of respondents agreed to share their data to help enterprises improve their products and services.

Enterprises are taking noble steps to revolutionize their security policies to cater to the broken backdrop. They protect various categories of data beyond customer information, including financial and intellectual property. Here are some measures that ensure data privacy in businesses.

Deploying advanced protection against external threats

Large organisations are deploying highly secured measures that include two-factor authentication, antimalware solutions, and firewalls. Companies are also implementing advanced strategies like Trusted Platform Module (TPM) and adopting a Zero Trust architecture.

Using encryption across boards

Encryption has become essential to protect customer data and sensitive company data. It provides a potential solution to data protection vulnerabilities in today's global economy. Encryption assures the safety of company networks in case of theft or loss and ensures that sensitive data remains inaccessible to outsiders in such cases.

Leveraging data localization solutions

Businesses intend to prioritize data safety by deploying data localization which has become a prominent policy issue in India. It emerged in 2018 after the Reserve Bank of India (RBI) made it mandatory for organizations to locally store and process sensitive data belonging to Indian users of multiple online payment services. It refers to several effective policy measures preventing data flow from one country to another. Data localization helps limit physical storage and data processing within the boundaries of the jurisdiction. Many countries have implemented data localization policies to combat concerns over free data flow. In the Indian context, data localization has made it mandatory for organizations to collect critical consumer data for storing and processing data in data centers operating within the Indian subcontinent.

How data localization helps Indian businesses?

Local storage of data facilitates reducing network latency and an enhanced speed. With the data getting stored locally and strong market drivers, including the growth of cloud, user data, e-commerce, etc., businesses can onboard quality talent at affordable costs and achieve transaction efficiencies. Even the cost of workforce, real estate, and bandwidth is at least 60 per cent less expensive in India than in other countries like the US or Singapore. Moreover, data localization has become the critical business parameter for enterprise businesses. It helps them in consolidated leadership, eliminating barriers, ensuring higher margins, enabling data storage and management, safety, and phenomenal growth opportunities. Besides the increased normalcy of remote working culture becoming the new normal amid the pandemic-driven era, there is an even greater need for data centers.


The points mentioned above suggest how data centers turned out as the backbone of modern technology, keeping our digitized world going. They are a valuable addition to businesses as their dependable extension of their IT team. It is why data centers should ever-increasingly become an indispensable factor for the success of modern companies in the future.

Manoj Dhanda

Founder and CTO, Microhost Cloud


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