A scalable cloud infrastructure serves two or more customers, where each customer is associated with at least one unit of virtual resources. The virtual resources are established by apportioning physical resources in the cloud infrastructure that are partitioned into pods within one or more zones in a scalable manner. Additionally, the cloud infrastructure establishes one or more management server clusters each comprising one or more management servers. The two or more customers create a number of virtual machines within pods in a zone. Due to the scalability of the cloud infrastructure, customer virtual machines may exist in non optimal locations within the zone. A method to migrate virtual machines and defragment customer networks is devised to optimally manage network traffic and data communication in a scaled cloud infrastructure.