colocation services

How Colocation Services Are Benefiting Small And Medium Enterprises

Colocation Is

Colocation refers to the practice of using professional data centres to rent or lease server equipment and reap the benefits of economies of scale, low latency, better bandwidth, high security and improved system efficiency. The concept is simple, it is costlier to have standalone servers than multiple servers grouped together used separately. Colocation centres are meant for having servers and other equipment together at one place which can then be rented or leased to several different clients.

Why Colocation

We all know that setting up of IT infrastructure which meets world class standards is not every business’s prerogative. The three main constructs to top-class IT infrastructure are Security, Reliability and Scalability. It is costly to get your own servers installed, and there are expenses incurred on having it up and running, plus maintenance costs. Think of it this way, a server needs an uninterrupted power supply, backup power, cooling, dedicated maintenance staff, security etc. everything adds to costs. Colocation services help get over these constraints via economies of scale.

Colocation services comprehensively answer this concern by making IT infrastructure accessible and affordable. Colocation services include various services like managed colocation services, data storage and management, data backup or recovery services, colocation by rack-space etc.

Colocation and the Indian SME Ecosystem

According to the latest stats available through SMB Chamber of Commerce and the Ministry of Micro, Small and Medium Enterprises, India has more than 48 million SME’s. A major chunk of these SME’s is left untouched by the benefits of technology. Top reasons for this are high cost, low awareness, poor infrastructure, and lack of skilled manpower. The study conducted by Intuit on technology adoption in micro, small and medium enterprises highlights that 45% of respondents consider ‘Cost’ as major barrier for adopting technology. The challenge is huge for the Indian SME ecosystem.

There are SME’s which are tech non-adopters- who think they will not benefit from deploying technology or are not aware enough, tech aspirers- who are aware of benefits but are constrained, and moderate tech adopters- who have adopted technology to some extent.

The divide between tech aspirers and IT is in one way bridged by colocation services. Imagine you have a business of furniture manufacturing and retailing (or any other for that matter). You have expanded horizons and from a single outlet you now have three outlets at different locations. Each one of these outlets is using a CRM, accounting software, an inventory management system, in short, they all are generating and using data which needs to be integrated, stored, used for better efficiency. Having the plans to do so, you would look for having a server to host the data at one place which then can be accessed from anywhere in the world via internet. Owing to your future expansion of the business the server needs to be scalable and affordable. In addition to this the server also has to offer a better data storage facility, security against viruses, better reliability. Building the required IT infrastructure of your own requires heavy investment. To overcome this hurdle, we have colocation services.

Colocation services enable SME’s to implement technology at a fraction of the cost of building a complete server facility. Managed colocation services are such that the client gets hassles free solution wherein all the back-end is handled by colocation service provider. There are different solutions layers such as data centre layer, networking layer, device layer and operating systems layer. Managed colocation services are such that the client only handles the Operating Systems layer, all the other layers are managed by the service provider.

The Way Forward

Over 40% of India’s exports come from SME’s. Indian SME’s are competing globally, and technology is the way forward to compete. The Indian SME’s will realize its potential when they adopt technology and come at par with their global contemporary counterparts. Colocation services bring technology one step closer to SME’s by making it affordable. While we have seen gradual improvement in acceptance to technology in India, a lot still needs to be done.


Radhe Dhakad is Support Executive and Network Admin at RackBank Datacenters Pvt. Ltd.. He is our curious techie who loves experimenting on servers and likes to pen down whatever he explores new on server technology!

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