COVID-19 increases data centre competition

By Harry Menear
A new report from Turner & Townsend shows that the pandemic has elevated competition and capacity challenges across the global data centre market...

While industries from manufacturing and construction to supply chain have faced disruption this year, the data centre industry has largely defied the trend. As remote work, online learning and telemedicine have increased demand for digital services, data centres have become increasingly essential infrastructure. 

A new report from industry analysis firm Turner & Townsend has found that the COVID-19 pandemic has dramatically increased the competitiveness of the data centre industry, while also raising issues of capacity, as operators in some markets struggle to keep up with demand. 

The market, the report found, is equally divided in its opinion over whether the industry has successfully kept pace with frantic demand for digital services driven by COVID-19. 

Construction woes

A key finding of the report centres around the data centre industry’s relationship to the construction sector. While existing data centres have found their server racks filling up with new and expanding clients, companies undergoing new data centre construction projects have faced issues, as COVID-19 has sent ripples of destruction across the construction sector. 

Turner & Townsend’s report found that 79% of industry professionals believe that COVID-19 has caused productivity losses and higher operating costs on data centre construction sites. And 55 percent of respondents believe there will be a rise in data centre construction claims and litigation in 2021 linked to COVID-19.

“The current crisis, and increasingly competitive nature of the market, has starkly exposed the fragility of the global supply chain and its potential to curb future growth. Data centre providers need to be alive to the very real risks of contractor insolvency and knock-on impacts to projects,” writes report author Dan Ayley, Global Head of Hi-tech and Manufacturing. 

Looking ahead

The report notes that 2021 will be a pivotal year for the data centre industry. Faced with rising construction costs and complications, and faced with a worsening skills shortage across the industry, data centre operators will need to upskill and develop local talent in order to meet demand and address the weak points in the industry’s supply chain. 

“Currently, we have a very small, specialised data centre supply chain servicing an enormous, global market. This needs to change if we are to meet the capacity challenge ahead,” adds Ayley. 

There is huge opportunity for expansion, but without careful investment into improving the resilience of the data centre industry’s supply chain, operators could find themselves facing more severe pain points than ever before. 

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