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Demand for data center space in India is higher than supply, with providers running at 80-90 percent capacity and closed bookings for planned expansions, a market analysis firm reported Thursday. The analysts are expecting a 37.4-percent growth rate in the third-party data center segment.

The findings are part of Frost & Sullivan's latest report on the data center and managed-service market in South Asia and Middle East. Generally, increasing demand for managed services in those markets is being driven by enterprises' growing requirements for compute and networking capacity, which makes manageability more and more challenging.

Companies are looking to leverage advanced skill sets of service providers' personnel and high service-level guarantees as they transform their IT spending from a CAPEX model to an OPEX one.

"The global economic downturn has made enterprises adopt a cautious mode in IT spending," Frost & Sullivan analyst Saumya Upadhyaya said in a statement. "Disaster recovery services are driving up the adoption of third-party data center services by large enterprises.

"Infrastructure and desktop management services are the key services being increasingly adopted by enterprises from the managed services portfolio."

The analysts reported that the United Arab Emirates market is seeing "huge traction," with most third-party data center providers mulling nearly 100-percent expansions of their facilities' sizes in the next several years. Similar to the Indian market, UAE service-provider data centers are about 90 percent full, with expandable space booked in advance.

While there is considerable interest in network, voice and security management, the biggest demand in UAE is for data center services. Frost & Sullivan expects UAE managed service market to grow at a rate of 25.7 percent.

Two emerging markets in the region are Egypt and Saudi Arabia.

Most Egyptian providers' customers are domestic, with most demand for hosted managed services. Key offerings are disaster recovery, backup services, managed network, and security solutions. North Africa and Middle East are prospective target markets for providers in Egypt.

Most customers in Saudi Arabia are local companies with regional presence.

The analysts predict that the currently slow Sri Lankan market will see significant growth in the near future, with third-party data center market predicted to grow at an 18-percent rate and with a number of Indian companies planning to expand into Sri Lanka.

Managed network services are a key offering in this market, with strong interest in application services like messaging, collaboration, and Customer Relationship Management in the data center management and desktop management space.

There is also potential for Sri Lanka to become an attractive disaster-recovery site for South Asian markets.