BrazilSurge in data use to drive strong growth of global data center market
Operating as the backbone of digital transformation, data centers are set to play an increasingly important role in economies worldwide, with the market projected to accelerate in the coming years to reach a value of over $430 billion by 2028. That is according to a report from Whiteshield commissioned by Khazna.
Valued at round $324 billion today, the global data center market size is forecasted to grow at a CAGR of 5.8% to reach $436 billion in 2028. The number of people working in the industry will by then have hit around 2.5 million.
The sector’s steep growth is the result of the immense – and rapidly growing data hunger – from governments, businesses and people. The Whiteshield and Khazna analysis found that the volume of data that is created and consumed is growing at a phenomenal rate, with over 180 zettabytes of data expected to be generated in 2025.
Data centers serve are the foundation of this flow of information, ensuring that data is stored securely and ‘transported’ to its users. Today, there are tens of thousands of data centres worldwide, with the ten largest nations in the market housing over 8,000 data centres.
At the consumer side, data consumption is primarily driven by smartphones and tablets, and applications for document and image storage. At the business side of the landscape, data is playing a key role in how organizations provide digital services, and run and improve their strategies and operations.
Previous research has shown that organizations that work data-driven manage to lift their performance to higher levels. At a macro-economic level, the digital economy is a trillion dollar opportunity for the world, of which the GCC could capture a $100+ billion windfall.
“Data centers have emerged as the cornerstone of the global digital economy, fueling a multitude of industries ranging from retail and manufacturing to infrastructure and transportation. These vital hubs serve as the linchpin of our digital ecosystem, facilitating the seamless flow of information that drives businesses, empowers consumers, and fosters technological innovation,” said Whiteshield and Khazna in the report.
Hyperscalers – data centers that offer a single, broadly scalable computational architecture for digital and cloud – will be the fastest growing segment in the data center landscape. Propelled by the rising demand for data-driven technologies such as artificial intelligence (AI) and machine learning (ML), the market will expand at a CAGR of 27.9% to hit $935.3 billion by 2032.
Economic contribution
While some stakeholder groups may be resistive to seeing new data centres established in their area, the Whiteshield and Khazna report highlighted the economic benefits that come with embracing their arrival. An average single facility directly generates $243.5 million in local economic output and sustains 157 jobs, while contributing $32.5 million to the local economy and $1.1 million in government revenue.
Beyond these benefits, a data center also generates indirect benefits such as employment in the wider ecosystem, and a boost to the digital and ICT infrastructure which in turn has spill over benefits.
“Data center investment not only leads to direct economic and employment impact, but also lays a critical foundation for enabling and catalyzing societal benefit such as upskilling workforce across a spectrum of professions, fueling cross-sectoral growth through entrepreneurship and investment, and powering innovation to secure a sustainable future,” said Johan Nilerud, Senior Director Strategy and Planning at Khazna.
Philippe Nahas, Partner at Whiteshield, added: “Investing in robust data center infrastructure is not just about technological advancement; it's a strategic catalyst for economic prosperity and job creation.”
Investments
The surge in data center demand is leading to a construction boom and an influx of investments in the sector. In 2021 and 2022, foreign direct investment (FDI) into data centers topped $44 billion, more than double the amount in 2019. To meet future demands, investments will need to ramp up in the coming years.
According to the report, Denmark and Sweden are the most attractive countries for data center investments, followed by the United States, the Netherlands, and Finland. Not surprisingly, the authors found a relationship between data center market size and the maturity of ICT services.
“Data centers play a crucial role in the ICT sector by hosting cloud services, supporting digital content distribution, and enabling data analytics, among other things. As such, countries with a robust data center market often have a vibrant ICT sector, as the availability of advanced data center infrastructure facilitates the development and deployment of cutting-edge ICT solutions.”
