Bhutan : The Next Data Hub

Bhutan and Electricity

For long I didn’t write about one of our neighbors – Bhutan. Of late, Bhutan has become a fast growing economy with an increase in export of electricity (earned $175 million). The economy grew as high as 22% in 2007. And, there are six giant hydro-electric projects coming up soon to take the generation capacity upto 10,000MW by 2020. The India-Bhutan co-operation could chage the entire economic scenario of Bhutan. It has a potential to produce 30,000MW of power, of which only 2000MW is generated. So, it could earn a couple of billion dollars easily with export of electricity.

[Al-Jazeera reports from Bhutan]

The Potential

If we look at world history of economic development, a few countries went up in the ladder of economic development only through exploitation of their natural resources. Most of the others actually used their resources more and more efficiently, for higher value added products and services. So, Bhutan should concentrate not only on getting more and more revenue out of electricity export, but also at making more efficient use of cheap electricity to build up electricity intensive industries.

Given this context, I am not at all surprised to read (source1, source2) that big MNCs are setting up Data centers in Bhutan. Along with this, there are proposals to have Data Disaster Recovery Center (can be another form of Data center), BPO and other kinds of Software Development activities. The Bhutanese news media has hailed these proposals and rightly suggested that Bhutan has potential to become the cyber hub of Asia.

“Given Bhutan’s surplus power, it could be a data center for a lot of Asian countries, and all IT Indian companies. Data Centers are places where large power intensive computers are set up with the conditions of power, connectivity and stability. “

“Microsoft expressed interest to help Bhutan in terms of education and possibly to set up data centres”

From wiki -

“A data center is a facility used to house computer systems and associated components, such as telecommunications and storage systems. It generally includes redundant or backup power supplies, redundant data communications connections, environmental controls (e.g., air conditioning, fire suppression) and security devices.”

I searched online to find that there are a few basic prerequisites of a place to be successful as a Data center location. And, as per experts, the key component of the prerequisite is the cost of power. It is noted that

“According to AFCOM’s 2005 survey of its members, data center power requirements are increasing an average of 8% per year.”

Furthermore, Gartner has already predicted that -

“By 2008, 50 percent of current data centers will have insufficient power and cooling capacity to meet the demands of high-density equipment … Traditionally the power required for non-IT equipment in the data center (for example, cooling, fans and pumps) represented about 60 percent of total annual energy consumption. As power requirements continue to grow, energy costs will emerge as the second highest operating cost in 70 percent of worldwide data center facilities by 2009.”

No wonder that Bhutan can provide green, cheap and reliable power supply for data centers. More interestingly, Bhutan is a cooler and pollution-free country than the locations having most of the data centers. This will significantly reduce the cooling cost for equipments.

The next important thing is the security. Bhutan does have a very low crime rate and ranks high in Global Happiness Rankings. It is also located in between two future powers – India and China – which enables it to have secured borders with little investment in defense.

The missing things should not stand in the way. Bhutan is yet to be connected through Fiber Optic cable since it is a landlocked country. But, bordering West Bengal is going to have a submarine cable landing station very soon. The station, in Kanthi, is approximately 600km away from Bhutan. If the demand increases, a higher bandwidth cable can bank in the shore of Bengal to cater to the data centers. Bhutan is well-connected with India (550kms away from one of the Indian Metro city – Kolkata), but it needs better connectivity with China, Singapore and the Western world. To begin with, there are indeed no local talent pool available, but it will grow with time. Indian IT professionals can work in Bhutan to keep the data centers running. Marriage of cheap power with cheap skilled-labor can create win-win situation for India and Bhutan. Although Bhutan is located in the Earthquake belt, there has not been much damage due to earthquake till date. To kick start the whole process, the Government of Bhutan can announce a tax holiday for setting up data centers in Bhutan. The government has roped in McKinsey, a consultancy firm, to see how Bhutan’s potential could be converted into opportunities.

The Advantage Asia Paradigm

In the next century, most of the world will be digitized, i.e. most of the information will be stored as digital information. As each human being has some data (payroll, human resource, election, survey and even personal emails) for himself/herself , the amount of information is directly proportional to the population density of a region. India, China and South-East Asia have already started digitizing most of the information, Bangladesh is going to follow soon. Given all the potential Bhutan has, to convert itself into the data-hub for Asia, we can also see how Asia will gain out of Bhutan.

As Bhutan is located (follow the arrow mark) very close to one of the most dense world population, an increased digital activity in the region will translate into the demand of data center capacity in Bhutan. Right now, most of the data centers are located in USA, so it takes longer to retrieve data and send it across the network half way through the globe.

As we talk about the network, we can understand what happens when a undersea cable is broken in Egypt or Algeria. Bhutan, even before it has a live data center, can offer the Asians the facility to backup sensitive data as a part of disaster recovery.

Conclusion

As the supply of Indian service professionals reduced the service cost, the factories in China reduced the cost of commodities across the world making it affordable for poorer people to live with dignity, Bhutan can contribute with cheap power to decrease the cost of hosting data. It can be a giant step towards globalization of data. It’s a win-win game for Bhutan and the rest of the world.

Photo Courtesy – GRIDA.