Ukrainian data centers are preparing to enter European and CIS markets

Ukrainian data processing centers (DPC) are targeting the international market. Director of Ukraine’s largest data center BeMobile Valeriy Volniy said in a conversation with Capital that his company began examining the demand among European customers. He says the prices of the Ukrainian DPCs are 15 – 20% lower than in Europe. “We have cheaper electricity. And professionals’ salaries in the west are much higher,” he added. “It is quite probable that the rise in the currency exchange rate led to a conditional increase in the cost of services of foreign data centers,” Director of the Volya data center Iryna Stelmakh added.

Noteworthy, until recently Ukraine has been known only for storage of content by foreign pirates. For example, in 2012 the law enforcers closed the world-known torrent tracker Demonoid, which was located in the Kolokol Data Center and last year the police confiscated servers of the pirate movie theater www.my-hit.ru, which Russians used for watching videos on-line.

Enticing the neighboring countries

Stelmakh says customers from European countries may be interested primarily in rental of capacities and cloud services, because they are unlikely to place their servers in Ukraine.

She adds that it is quite difficult to compete in terms of price on the European market, as it is saturated with experienced companies. Such customers are more likely to be a special case. “Our services are more interesting for customers from neighboring countries, including Russia and Belarus,” says Stelmakh.

Today, the company is negotiating with potential partners from Lithuania and Latvia. “The level of development of their data centers is higher than the level of Ukrainian DPCs, but we can develop fault-tolerant solutions for our markets, offering customers duplication of data. This is of particular interest for companies with a cloud infrastructure,” Stelmakh stressed.
Director of the UNIT-IS Data Center in Odesa Vasyl Shepotko has also recently noticed a sudden increase in demand for services from clients in Asia and the Middle East.

Volniy hopes to attract customers from Europe engaged in the Internet business or involved in financial and commercial sectors. Besides that, he is confident that it will be possible to rent spaces for large international DPCs that are seeking the opportunity to create their platforms in Ukraine.

Not all companies are optimistic about foreigners. In terms of favorable conditions, the best outlook is that the first customers mainly from Eastern Europe will take interest in Ukrainian data centers no sooner than by 2018, believes Marketing Director at Kyivstar Vasyl Nizovets.

Conceal European data

Deputy Director of the Parkoviy Data Center Denys Burduk sees no point in price competition with foreign centers. He says a cabinet full of servers consumes only UAH 2,500 in electricity every month, which is slightly less than in Europe. Also, it is much more difficult to find money for building an infrastructure and equipment in Ukraine, because in Europe it is possible to obtain a loan at a 5 – 7% interest rate. In Ukraine, a similar loan is offered at an interest rate of 20% or even higher.

Still, Parkoviy also foresees for itself a niche in the European market. “We noticed a trend – more foreign business owners would like to locate their servers abroad,” said Burduk. In his opinion, this is due to the fact that companies try not to disclose certain data using legitimate means and it is quite difficult to do so in Europe due to the strict regulations. “There are still only a few such potential customers. But given the fact that the western market is vast and data centers in Ukraine are scarce, such a trend may play a significant role for us,” he emphasized.

Volniy adds that peace in eastern Ukraine is essential for cooperation with Europeans, as well as signing of the economic part of the Association Agreement with the EU, which will guarantee healthy operation of foreign businesses.

Return our own
Along with preliminary negotiations with potential western customers, the devalued Ukrainian hryvnia has enabled DPCs to win back those customers that recently fled from the country, says Stelmakh. “Over the last six months we have observed this disappointing trend,” she says.
Capital recently reported that a number of foreign companies, such as Linxdatacenter and Lattelecom, have offered their services in Ukraine on the basis of remote DPCs in Poland and Latvia. They provided international protected channels, which allow Ukrainians to work with data remotely without any serious problems.

Opinions

Denys Burduk,
Deputy Director at the Parkoviy Data center:

In the near future we expect increased activity on the market, including in the segment of cloud-based services. According to our estimates, an increase in demand will be favored by the inflow of investments and implementation of systematic reforms in the country, which will require involvement of considerable resources (both DPCs and cloud-based platforms) in a fairly short time.

Valeriy Volniy,
Director at Be Mobile:

Our company’s main plan for the near future is launching the second stage of the DPC. According to the plan this will be 2,300 sq. m, of which 1,000 sq. m will be used for IT platforms. But we have suspended the preparation because of the situation on the market. Currently it is very hard to predict market dynamics or speak of any trends. Despite the large number of applications and projects, customer dynamics for the first 6 months is very disappointing.