The rise of data centres: data centre tiers classifications explained

Aug 31, 2021
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Sreejith G
Vice President- Data Centre Operations
15 min read
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Growing businesses need scalable and reliable data centre space to colocate their IT infrastructure. Power or data centre downtime can impact a company in terms of lowered productivity and lost customers and revenues. It's better to opt for a third-party data centre provider as organizations can save themselves the time, effort, and cost of building and maintaining their own facility. The global colocation data centre market is expected to generate revenues of over $58 billion by 2025.

How is it Beneficial to opt for External Data Centres?

Let's now consider the costs and effort of developing an in-house data centre versus hiring a colocation provider:


It can take up to 24 months to build a data centre as the construction has to pass through several stages. In contrast, a colocation provider can have their space ready in just weeks which will save you a lot of time.

Staffing and Core Business

To build a data centre, an enterprise is required to shift its expertise, knowledge, time, and additional manpower resources from its core competencies and comprehend the specialized requirements of a data centre such as cooling, power, maintenance, security, environmental/local codes, and fire suppression.

Ongoing Support

Besides the initial costs of acquiring real estate and building the data centre, businesses would also have to shell out for ongoing expenses such as heating, power, air conditioning, security, and maintenance of assets.


A single-tenant data centre has a lifecycle of 10 or more years. This can increase the bill by adding to the costs of energy consumptions, infrastructure, and added capital. If the facility is too large, each rack's cost will be greater. If it is too small, the company will be short of space and would need to spend more to get extra space as needed.


Colocation is a better idea as you can lease the facility for the time you want and increase or decrease your footprint as required. Colocation providers allow you to add or remove capacity cost effectively and quickly.


To build your own data centre, you'd need to shell out for certifications and the processes and requirements that should be implemented for certifications like HIPAA and SSAE16.


Developing an in-house data centre entails the added expenses of connectivity from ISPs and carriers by way of local loop and fiber charges. This will also extend the time for the data centre to be operational. Colocation facilities generally have carrier props in their premises which offer access to their networks and redundancy without added local loop charges.

Colocation Services are a Better Deal

Developing a single-tenant data centre entails deep investment in terms of money, time, and effort. It is more cost-efficient to hire colocation space from a third-party vendor. The Uptime Institute estimates that colocation is 19% to 64% cheaper than developing a single-tenant Tier 2 data centre.

Definition of Data Centre Tiers

Data centres are ranked in tiers as per their potential infrastructure uptime and performance. The Uptime Institute ranks four data centre tiers: 1 to 4, and the higher the ranking, the greater the potential uptime capacity of the data centre.

Scenarios Where Tiers Matter

Organizations need to choose a data centre tier according to their needs. For a smaller firm that doesn't need to be operational 24/7 and can allot time for maintenance during weekends and after-hours, a tier 1 or 2 data centre would be sufficient. Such enterprises need not invest in a tier 3 or tier 4 data centre.


Big multinational corporations that are operational 24/7 and have critical applications and systems that need to be up all the time should opt for a tier 3 data centre or tier 4 facility.


Data centre standards and tiers are also crucial in the following situations:


  • For risk evaluation, when you need to validate network availability to your management.

  • For providers that host a vital application for their client as the customer will ask details such as the data centre ranking, certifications, and the certification standard used.

  • For organizations that are redesigning or building their in-house data centre, as they need a blueprint for configuration and setup.

  • For companies that plan to move their data centre to a cloud or external provider. Data centre tiers and rankings can help such firms comprehend the risks in hiring these vendors.


It is more time- and cost-efficient to hire a colocation data centre service than to build your own in-house data centre. You can select a data centre tier according to your needs as each tier denotes particular capacities and capabilities.


We are leading player in the Indian data centre sector with 21 state-of-the-art facilities and biggest floor area at 3.8million sq. ft.


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