Alibaba to build two data centers overseas

A booth introducing Alibaba Cloud services is seen at an exhibition venue during Alibaba Group's 11.11 Singles' Day global shopping festival in Shenzhen, Nov 11, 2016. [Photo/Agencies]

Alibaba Cloud, the cloud computing arm of Alibaba, plans to build two data centers in India and Indonesia by the end of next March, as the internet giant speeds up its transition from a pure e-commerce player to a comprehensive technology firm with growing overseas outreach.

With the planned facilities in Mumbai and Jakarta, Alibaba Cloud will increase its total number of data center locations to 17, covering countries such as Australia, Germany, Japan and the United States, said Simon Hu, president of the business unit.

"Such deployment will enhance our computing resources in Asia and allows greater support for small and medium-sized enterprises in cloud capabilities," he told the Alibaba Computing Conference in Shanghai over the weekend.

At the same event, the company also signed a deal with India's Tata Communications Ltd to enable enterprise customers from more than 150 countries to have access to virtual private clouds, the internet and customers' own networks.

Launched eight years ago, Alibaba's relatively nascent cloud business has grown into its fastest-expanding subsidiary, which has recorded eight consecutive quarters of triple-digit revenue growth rates.

In the quarter ended March 2017, it reported having 874,000 paying customers and a 103 percent year-on-year revenue surge to $314 million.

Company executives also forecast continued robustness in the segment on the back of both the increase in customer numbers and customer spending, with Alibaba CFO Maggie Wu reassuring investors last Thursday in Hangzhou that it is close to reaching break-even.

According to consultancy IDC, the company occupied more than 40 percent of China's burgeoning 10-billion-yuan ($1.47 billion) public cloud market last year, a sector that is projected by Bain&Co to skyrocket to $20 billion by 2020.

"China's market comprises many rapidly growing businesses that are less encumbered by legacy IT systems than is typical in more developed markets, which means they can more easily adopt new IT models," said Kevin Meehan, a partner at Bain.

Such a positive outlook is in part riding on the surging demand from Chinese companies in financial services and manufacturing that are ripe for digitalization through cloud computing and expanding businesses overseas.

Alibaba's archrival Tencent Holdings Ltd said in April it would more than double the number of its offshore data centers to eight, and pledged to use cloud technologies to revolutionize industries from manufacturing to retail.