Colocation vs On-Premise: Why More Businesses Are Making the Switch

The question of whether to build an on-premise data centre or partner with a colocation provider is one many organisations in India are facing today. The rise of cloud adoption, artificial intelligence, regulatory requirements, and round-the-clock digital services means IT leaders need infrastructure that is reliable, scalable, and cost-effective.

On the surface, managing your own on-premise facility seems like it offers more control. However, in reality, it comes with significant upfront investments, lengthy build timelines, and the ongoing responsibility of managing non-core infrastructure operations. Colocation, on the other hand, offers ready access to modern facilities, transparent costs, and the ability to focus on your business while the data centre is managed by experts. Furthermore, colocation gives the control required by organisation without the investments and responsibilities on the infra side

At STT GDC India, we have observed enterprises, BFSI institutions, PSUs, and hyperscalers undergo this decision-making process. Increasingly, the verdict is clear: colocation delivers more value and less risk.

Let’s explore this in detail.

1. The Decision Framework
When considering a data centre strategy, companies usually evaluate:

For most businesses, once you weigh these factors, colocation emerges as the more intelligent choice.

2. Deployment Timelines: Speed to Market

• On-premise: Setting up your own facility requires land, statutory approvals, design, civil work, procurement, and installation. This can take 6 months to 2 years.

• Colocation: Facilities like those operated by STT GDC India are ready for service in 4–8 weeks.

That’s the difference between waiting for a year or more versus being able to scale your IT infrastructure almost immediately. In today’s competitive market, speed is not a luxury — it’s a business necessity.

3. The Real Cost Comparison
Many IT leaders underestimate the actual cost of building their own data centre. Beyond land and construction, you need to account for:

• Equipment and technology refresh cycles

• Skilled and unskilled workforce

• AMC and onsite maintenance costs

• Power and bandwidth bills

• Compliance, certifications, and audits

• Captive investment in operations

In contrast, colocation shifts the model from heavy CapEx to predictable OpEx. You pay for space, power, and connectivity — with no hidden costs. Services such as reporting, logs, maintenance, and bundled uptime SLAs come included.

Here’s a pictorial representation:

A key decision factor is delivery timelines: On-Premise DC deployments typically take 6 months to 2 years, whereas Colo enables rapid deployment aligned with business objectives.

4. Scalability Without the Hassle
Growth is rarely linear. Your business may need to add more servers tomorrow, scale down next quarter, and expand again next year.

• On-premise: Expansion involves purchasing land, constructing new facilities, and incurring new capital expenditures (CapEx).

• Colocation: At STT GDC India, you can expand seamlessly — either in contiguous space within the same data hall or in another hall or floor, connected via high-speed LAN extensions.

This agility enables businesses to respond quickly to market changes without being hindered by infrastructure delays.

5. Reliability and Uptime: The Non-Negotiable 
Downtime can turn off a business. Maintaining enterprise-grade uptime in an on-premise facility is expensive and complex.

With colocation:

• Facilities are designed to TIA-942 Rated 3 and Tier 3 standards.

• Customers benefit from uptime SLAs of 99.982%.

• The infrastructure comprises Chillers in N+1 configuration, dual-header chilled water piping, PAHUs in N+1 or N+2 configuration, and dual power paths from independent substations.

• Round-the-clock monitoring by skilled technicians ensures issues are addressed before they escalate.

• Proactive & Predictive Maintenance – Ensuring Reliable, Always-On Infrastructure.

• Vendor Longevity/OEM Relationship: Capacity to Elevate Concerns/ Aptitude for Raising Issues to a Higher Authority of OEM.

6. Security by Default 
For many organisations, implementing enterprise-grade physical security on-premises is unaffordable. Colocation facilities, however, come with:

• Biometric access with Two Factor Authentication (2FA) for Data Halls

• Turnstiles

• X-ray baggage scanners

• 24/7 Guarded Security and Continuous CCTV SurveillanceStrict compliance with regulatory and certification standards

This layered security framework provides enterprises with peace of mind, knowing their critical infrastructure is secure and compliant.

7. Connectivity that Enables Growth 
On-premise data centres are typically limited to a handful of ISPs based on site feasibility. This creates vendor lock-in, restricting flexibility.

Colocation data centres, by contrast, are carrier-neutral with major ISP presence and redundant backbones. With on-site Points of Presence (PoPs), enterprises enjoy low-latency connections and seamless access to multiple networks and cloud platforms.

8. Focus on Core Business, Not Facilities 
One of the most significant hidden costs of on-premises is distraction. IT leaders and teams spend time managing power, cooling, compliance, and facility issues, rather than focusing on strategic business initiatives.

In a colocation model, these responsibilities are managed by the provider. At STT GDC India, our teams handle infrastructure operations, allowing customers to focus their time and resources on innovation, customers, and growth.

9. Why the Market is Moving to Colocation 
Industry trends tell the story clearly:

• Large enterprises and cloud players already operate primary workloads from colocation facilities.

• SMEs, BFSI, PSUs, and hyperscalers increasingly prefer to focus on their core business, leaving non-IT infrastructure to specialists.

The STT GDC India Advantage 
With over 30 facilities across 10 Indian cities, a current capacity of 400 MW IT load (scaling to 800 MW), and a strong focus on sustainability and carbon neutrality by 2030, STT GDC India is uniquely positioned to support India’s digital growth story.

Whether you are a government department looking to modernise, an enterprise scaling cloud workload, or a hyperscaler setting up AI infrastructure, our colocation facilities deliver speed, reliability, scalability, and security, all while lowering your total cost of ownership.

The choice between on-premise and colocation finally comes down to control vs. convenience, CapEx vs. OpEx, and isolation vs. ecosystem.

As businesses demand faster deployment, tighter security, and sustainable operations, colocation is emerging as the clear winner. By partnering with STT GDC India, enterprises can accelerate their digital transformation journeys with confidence, knowing that their infrastructure is in the hands of experts.

Looking to future-proof your IT infrastructure? 
Talk to us about how colocation can work for you. Learn more →