Lockdowns and quarantines associated with COVID-19 demonstrated how fast markets can move and new demand for digital infrastructure can grow. Management consultancy firm McKinsey noted that COVID-19 caused a five year leap forward in consumer and business digital adoption in around eight weeks. As economic recovery accelerates, so will digital transformation, with data centre facilities playing a critical role in long-term digitalisation in mature and emerging hubs.

The total investment in data centres is expected to increase from $244.74 billion in 2019 to $432.14 billion in 2025 at a compound annual growth rate (CAGR) of 9.9%, according to ResearchAndMarkets.

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Overall market growth is matched with a set of unique conditions that is increasing the need for local and distributed digital hubs:

In 2020, 8 of the 10 world’s largest populations were in Africa and Asia, according to Pew Research. Over the next 80 years, African countries will have more than five countries in the top 10 including the Democratic Republic of Congo (DRC), Ethiopia, Tanzania and Egypt. Markets in Africa and Asia tend to have young populations with a growing number of internet users. These internet users increase demand for cloud-centric applications and services.

So far, hyperscalers like Alibaba Cloud, Amazon Web Services, Google Cloud Platform, IBM Cloud, Microsoft Azure and Oracle Cloud have developed hubs in major global markets. Many are focused on the US and Western Europe or home markets in Asia like Alibaba Cloud. As demand for cloud infrastructure in local markets increases, they will need to add presence in a growing number of markets globally. Their roadmaps have to include new local cloud regions around the world.

The global edge computing market is projected to reach $43.4 billion by 2027 with CAGR of 37.4% between 2020 to 2027, according to Million Insights. A growing number of applications and services are being hosted at the edge of the network to reduce latency while increasing performance. Edge computing requires hosting data and applications close to end users and often requires smaller data centre facilities in more geographic locations.

A growing number of countries are rolling out data sovereignty laws that require Software as a Service (SaaS) and cloud storage services to host data within a single country’s borders. This means data has to be hosted in-country and cannot be transferred across borders. These kinds of regulations limit international data transfer and in turn increase demand for local data centre space.

The result is growing demand for digital infrastructure investment in unique local markets, rather than the traditional global hubs. It’s the next hubs that will drive the next wave of digital innovation.

Ultimately, these factors combined are driving the next digital hubs that have been underserved, overlooked and now need digital infrastructure investment. There needs to be greater access to digital infrastructure in rapidly growing local markets with the same service and experience they receive in global destinations. That way service providers can deliver new levels of performance and user experience while keeping data in-country.

Learn more disruption in the data centre market and see Damac Data Centres vision for developing the next digital hubs.

Going Local: Choosing the Right Data Centre Provider in Tier 2 or 3 Markets

Digital infrastructure providers need to make organisation’s digital journey’s simple. They should be making it easy to expand into a new market and deliver services to customers with little to no friction. The data centre facilities should offer the scalability to support continual transformation and the evolution of the organisation’s digital strategy in the local market as well as markets around the world.

However, adapting to individual needs is not always simple.

Not all digital infrastructure providers are the same. Hyperscalers, cloud service providers, content companies, OTT players and enterprises all need a digital infrastructure provider that understands their needs and the local market. They need to offer a consistent global experience across local digital hubs, making it simple to land and expand in new markets.

A digital infrastructure provider in Tier 2 and 3 markets has to deliver these capabilities:

The digital infrastructure provider should offer a consistent user experience across multiple facilities to accelerate deployment times and streamline deployments. If they can offer the same experience in Europe that they can offer in the Middle East or Africa, the organisation will save time and resources getting up and running in a new market.

The digital infrastructure provider should have data centre facilities in high-growth markets beyond the standard global hubs. They should be able to offer facilities in markets that offer new growth opportunities and have strategic value for a range of customers. A coherent data centre development strategy means an organisation will benefit from a long-term partner and they can grow together.

In challenging markets, the digital infrastructure provider should be able to act as a guide and provide recommendations for being successful in the local market. It should be able to help the organisation to navigate local requirements, understand the operational environment, and get them up to speed on deploying and growing locally.

Each facility should have a continually growing and developing connectivity ecosystem. The digital infrastructure provider should encourage the growth of connectivity options for customers and support partnering amongst existing customers.

Each facility should offer a neutral environment without preferred connectivity options or dominant players. It should be an open environment that is focused on enabling digital adoption and innovation in the local market.

Each facility should have proven power availability, robust resiliency strategies and multiple power back-ups. Local standards and certification should be met or exceeded to guarantee maximum uptime and seamless service delivery.

Our latest eGuide ‘Choosing Your Next Global Hub: A Guide to selecting data centre partners across underserved and overlooked markets around the world’ explains how digital infrastructure providers large and small can create maximum impact with a consistent data centre experience.

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