Jun 16, 2025
0 Colocation

Colocation vs Cloud: What Works Better for BFSI in 2025

Colocation vs Cloud: What Works Better for BFSI in 2025

Whether cloud or Colocation is the best option for your company, one thing is certain: the last few years have shown the critical relevance of dependable data upkeep. Increased reliance on remote labor, increased frequency of natural disasters, and an increase in cybersecurity attacks have all shown that organizations require dependable data centers. Cloud computing is generally the first option that springs to mind. However, Colocation or hybrid environments may be a better fit for your requirements.

We’ll undertake a side-by-side comparison of cloud and Colocation to help you decide which option is best for you.

What is Cloud Computing?

Cloud computing is the transmission of computer services via the internet, allowing users to access cloud-based software, applications, resources, and storage from any compatible and allowed device and location. When employing a third-party cloud provider, enterprises are not required to invest in or manage on-premises infrastructure or hardware because the provider manages all investments, maintenance, and day-to-day operations.

Types of Cloud Computing

Businesses that use cloud hosting to manage their data can choose between public, private, hybrid, and multi-cloud.

Public cloud services are an affordable cloud option for enterprises that do not want to maintain, purchase, or operate on-premises physical gear.

A private cloud can be an on-premises solution or managed by a third-party provider, and it can be housed nearby to your office or near clients. It’s beneficial for businesses who require greater control over their workloads and legacy apps that cannot be transferred to the public cloud.

Hybrid solutions combine cloud and non-cloud infrastructure. This can be beneficial for organizations with legacy workloads that are too difficult to migrate or firms with demanding and complex compliance requirements for part of their workloads.

Benefits and Drawbacks of Using Cloud Computing

Cloud computing comes with benefits, including: –

  • Increased cost-effectiveness in infrastructure, real estate, and maintenance expenditures.
  • Improved time to market.
  • Scalability to meet the expanding needs of enterprises.
  • Increased productivity and performance, allowing your IT resources to handle other responsibilities.
  • More security and disaster recovery protection in the cloud, especially when working with a cloud provider that offers extra managed services.

However, there are some limitations to cloud computing.  If your apps are overly reliant on one vendor, you may encounter vendor lock-in, making switching to another cloud provider expensive or time-consuming.  While public cloud providers meet the majority of major compliance criteria, they may fail to meet more specific regulatory norms.  In general, cloud computing allows for less customization than on-premises frameworks or Colocation.

What is Colocation?

Colocation (commonly known as “colo”) enables your organization to run its own IT equipment in a third-party data center. When employing colocation services, the data centre’s responsibility is to offer a secure, reliable environment for the client’s hardware, whilst the user is responsible for maintaining and administering all of their own equipment.

With more traditional data centers closing, organizations are turning to colocation and cloud hosting services.

Types of Colocation Services

Colocation can be done wholesale, retail, or as a hybrid of both. Wholesale Colocation occurs when a corporation rents out space in a data center, such as a room or an entire cage. Larger organizations that need the space and resources are more likely to choose this choice. Retail Colocation is the rental of a cabinet or rack in a data center. It is a more scalable choice for smaller organizations that do not require as much power and resources.

Benefits and Drawbacks of Using Colocation

Colocation benefits include: –

  • Saving on on-premises data center real estate costs.
  • Improved disaster recovery and physical security because it is located in a provider’s secure data center.
  • The ability to scale without having to consider relocating buildings or constructing new structures.
  • Cost reductions via energy and facility management.
  • Increased connectivity choices when compared to an on-premises data center.

Colocation services, if not used to their maximum capacity, might be more expensive than cloud computing due to the cost of a dedicated room or area as well as capital expenditures (CapEx) for physical equipment. Colocation is more adaptable than the cloud, but less so than on-premises infrastructure.

Cloud Vs. Colocation: Business Considerations

When to Use Cloud Computing

If you don’t already have your own gear, want to get up and running quickly, and want to work with experts to set things up with a cloud service provider, cloud computing is an excellent alternative. Small or highly variable workloads that need to scale are also ideal for the cloud.

When to Use Colocation

Colocation can facilitate the shift from old workloads, improve disaster recovery readiness, and enable hybrid deployment. It’s a versatile solution with a diverse set of services and physical features suitable for practically any organization.

Legacy workloads are not always ready for the cloud right once, either because equipment contracts have not yet ended, extra development is required, or for other reasons. Moving to a colocation facility is a positive step that does not require any substantial changes right away.

Key Considerations for Using Cloud and Colocation for BFSI

Here are the key considerations for using cloud and Colocation for BFSI includes: –

Key Considerations for Using Cloud and Colocation for BFSI
  • Agility meets Scalability

Cloud computing has redefined infrastructure agility. For BFSI institutions, the ability to spin up new environments, launch services quickly, and handle spikes in user activity makes the cloud appealing. Whether it’s digital onboarding, real-time analytics, or fraud detection, the cloud’s elastic Scalability and OpEx model suit modern application workloads.

  • Power of Control & Customization

Despite the cloud’s advantages, Colocation still offers critical value for BFSI. With Colocation, financial institutions retain greater control over hardware, compliance measures, and physical security. Applications that require low latency—like core banking systems and high-frequency trading platforms—thrive in colocation environments. In fact, for many data-sensitive and compliance-heavy workloads, colocation BFSI models are preferred due to their predictable performance and regulatory alignment.

  • Data Sovereignty & RBI Norms

One of the biggest differences between cloud and Colocation in BFSI lies in compliance. RBI guidelines increasingly stress local data storage, sovereignty, and strict auditability. While cloud vendors offer compliance-ready solutions, Colocation often provides deeper visibility and control over data handling practices. In regulated environments, the debate on cloud vs. colocation banks leans in favor of Colocation, especially for sensitive customer data and core infrastructure.

Conclusion

The decision between cloud and Colocation is not about choosing one over the other. It’s about aligning infrastructure strategies with your organization’s unique business goals, compliance responsibilities, and technical demands. Cloud offers unmatched agility and Scalability, making it ideal for dynamic workloads and rapid innovation.

At ESDS, we understand the requirements for the BFSI sector. Our Tier-3 certified data centers colocation BFSI infrastructure, and complaint cloud hosting services are engineered to meet the highest standards of data security, performance, and uptime.

Let us know in the comment section below regarding the comparison between cloud and Colocation.

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Dec 14, 2021
0 Colocation

Managed or Unmanaged Colocation: Which One to Choose?

Managed or Unmanaged Colocation

As an end-user, if you have decided to opt for colocation hosting for your web servers, you need to determine the best colocation option for yourself. The first option is to physically take your machines to the colocation provider’s location and use their racks. At the same time, the second option could be renting out the server machines from the colocation provider. When you decide to take the machine to the provider’s location, it is usually termed Unmanaged Colocation. When you rent out server machines from the provider, it is known as Managed Colocation. Be it managed or unmanaged Colocation. They significantly impact a Data Center’s maintenance, pricing, processes, & applications that run on the servers residing in the Data Center.

What is Colocation?

Colocation or ‘Colo’ is the practice of leasing out server spaces and other computing hardware at the premises of a colocation services provider. Colocation services generally include a physical infrastructure where everything is present at one place comprising networking devices, physical security & other cooling components needed for supporting servers & storage offered by users. With a colocation hosting service in place, businesses have to share the costs related to hardware. Usually, some of the best colocation providers have the capability to store numerous servers, generators & uninterrupted power supply. Also, the providers are standardized with industry certifications, much like other hosting providers.

Benefits of Colocation Services

1. For a business of any size, colocation hosting services help them to save their initial infrastructure investments. The Colocation hosting infrastructure costs are shared amongst other enterprises that are availing the service of the colocation provider. Additionally, colocation hosting provides state-of-the-art services like robust security & redundant bandwidth to an end-user. Smaller enterprises can be benefitted from larger IT departments without incurring any huge expenses.

2. One of the financial benefits of colocation services is minimized downtime, and downtime for a few seconds could cause huge monetary losses. Through a scalable infrastructure & supporting resources such as bandwidth, diversified power sources, etc., colocation providers ensure near-zero downtime and smooth functioning of hardware even during physical disasters.

3. Colocation service providers ensure multiple layers of security are deployed through smarter mechanisms. Colocation Data Centers are strategically placed at a distance from the client’s on-site. Additionally, an on-site IT support team is kept for monitoring the security of technology assets. Colocation providers also offer industry-leading security mechanisms that allow easy restoration of physical & virtual data in case of losses or disasters.

4. With colocation hosting, businesses can guarantee that enterprises are easily able to handle traffic surges with ease. For this, colocation providers offer enhanced levels of bandwidth, while this spike in data is shared with other tenants present on the colocation server. This ultimately reduces the overhead bandwidth cost for an individual server tenant.

What is Colocation

What is Managed Colocation?

Managed Colocation is a bit different from traditional colocation hosting. In managed colocation hosting, the provider is responsible for managing a business’s IT infrastructure along with the physical hosting of these. Other managed services like security, backup, and storage are also offered in Managed Colocation services. Managed colocation hosting can be an ideal option for those who’re looking to retain their infrastructure with a certain level of expertise in server management. For smaller businesses, the biggest advantage of Managed Colocation is that it helps their costs in terms of physical space and the need for hiring IT expertise & infrastructure.

What is Unmanaged Colocation?

In an unmanaged colocation hosting costs related to housing & protection of servers are done by the colocation provider. Here, the end-user can directly benefit from the Data Center’s infrastructure, and however, the user is responsible if the server malfunctions. Unmanaged Colocation services vary from provider to provider, with one thing in common: providing a safe & secure passage for housing the servers. Unlike managed colocation hosting, the user has to perform all sorts of software upgrades, monitor configurations, patches, security & troubleshoot if any problem persists.

Colocation Data Center Industry Growth

The colocation Data Center industry is at a growing phase and has witnessed growth at a CAGR of 10.4% during the period Fiscal 2015 – Fiscal 2021. The industry has gained significant traction during the pandemic phase due to pent-up demand from different business verticals. The past few years have witnessed the emergence of several new players in India, resulting in increased supply. Several Government-led initiatives such as Draft Data Center Policy 2020, Data Localization policy have accelerated the demand for Data Centers in India.

Wrap Up

The final choice between managed and unmanaged Colocation should be carefully determined. CIOs and business heads must consult with their internal staff & experts regarding how much of the servers they wish to keep in-house. The decision should be made by keeping in mind the long-run benefits that the business aims to achieve.

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Aug 4, 2021
0 Colocation

Colocation Benefits – A simplified solution

Colocation hosting refers to the transfer of your IT infrastructure to a third-party data center. The data centers are extremely dependable, secure, and have a fully redundant infrastructure. Co-locating your web servers to a data center is always a good idea because it offers many advantages and provides a secure physical environment for your server.

Colocation web hosting provides all of the extra capabilities while also protecting data from natural calamities. Customers who have their own server can host it at a purpose-built Data Center, which is referred to as colocation (or Colocation Center). Customers pay for rack space in which to store their server while maintaining control over it.

There are numerous benefits which can be classified as follows:

Cost-effective

The colocation service is considered one of the cost-effective solutions for your servers to maintain. Basically, you don’t need to build and maintain the in-house requirements that your server demands can cost you valuable capital in facilities, Internet connectivity, and maintenance personnel. The colocation hosting providers have such kind of full facility available with their infrastructure.

Reliable Uptime

For server owners, uptime is always a big worry. With a colocation facility, one can rest assured that his server will be up and running at all times. Everything in a colocation center is redundant, so if something goes wrong, the colocation customers’ server and network equipment will be unaffected because redundant systems are in place to automatically replace the ones that went wrong.

Air conditioning systems, UPS (uninterruptible power systems), power generators, utility electricity, network routers, redundant Internet backbones with plenty of extra capacity, and redundant onsite network engineering employees are all examples of this.

More Security

Security is of prime importance when it comes to the servers or leasing any services for your IT equipment. Data centers are generally considered to be secured and well-established infrastructure. Data centers should be monitored 24-7. Your systems should be housed in a state-of-the-art data center, with redundant air cooling and filtering systems, designed to operate even in the event of a power failure. Data centers should be located and built to withstand natural disasters and other emergencies.

Network Speed & Reliability

Every server owner is concerned about getting good performance and dependability. The gear is designed to withstand both a climate-controlled environment and power conditioning. You can use server hosting to have access to enterprise-level backup and monitoring capabilities.

Many colocation service providers use BGP and have multiple Internet backbones and redundant Internet networks entering their facility. When a firm sets up a network at an office, they typically only receive the Internet bandwidth capacity that they require, such as a single T3, which is 45 megabits, or an OC3, which is 155 megabits, without redundancy.

Outage Protection

When deciding whether or not to move computers to a data center, power redundancy and backup are critical considerations. Power generators and backup power supplies are frequently used in colocation data centers to provide redundancy. This will allow networks to stay up even if there is a long-term power outage. Colocation providers frequently provide flood and fire protection for servers.

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