Shift from CAPEX to OPEX Drives the Uptake of Data Centre Services in GCC

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Despite the Middle East region not so pro-outsourcing, latest figures indicate overall managed and datacenter services markets in the UAE and Saudi Arabia growing at a healthy pace. Featured- One of the pioneer's in Data Center technology, Google's data center in Douglas County, Georgia. Photo- Connie Zhou/Google
Despite the Middle East region not so pro-outsourcing, latest figures indicate overall managed and datacenter services markets in the UAE and Saudi Arabia growing at a healthy pace. Featured- One of the pioneer’s in Data Center technology, Google’s data center in Douglas County, Georgia. Photo- Connie Zhou/Google

Over the past few years, data centre services in the Gulf Cooperation Council (GCC) countries have risen to the forefront as part of a general trend towards outsourcing and the need to control business costs. Organisations looking to cut down on the capital expenditures involved in setting up information technology (IT) operations are increasingly turning to the expertise and infrastructure services of data centre service providers, thereby boosting market revenues.

New analysis from Frost & SullivanData Centre Market in Gulf Cooperation Council Countries, finds that the market earned revenues of more than $231.7 million in 2012 and estimates this to reach $706.3 million in 2018. The markets in Saudi Arabia and Qatar are expected to grow the fastest owing to their rapid economic development.

Government support for infrastructure expansion, along with e-initiatives which drive digitalisation and virtualisation, have fuelled the growth of the data centre market in the GCC countries.

“The need for enterprises to easily scale their operations up or down and access the latest technologies without huge capital outlays add to the demand for managed services such as data centres in the region,” said Frost & Sullivan Information and Communication Technologies Senior Research Analyst Jonas Zelba. “The lack of in-house capabilities to keep up with constantly evolving technologies has further compelled businesses to outsource their IT requirements to data centre service providers.”

However, these opportunities have been curbed by the limited availability of bandwidth in certain areas. The irregular nature of broadband connectivity across different Gulf countries, where only major cities benefit from the fast fibre cable network, affects business development, and in turn, market growth.

Moreover, security concerns and the lack of trust in the ability of third parties to manage internal IT systems prevent several enterprises and governments from adopting data centre hosting services. This mindset is particularly prevalent in conservative end-user verticals such as financial services, where security is critical to business operations.

Therefore, data centre providers in the GCC need to invest in raising awareness, especially on the benefits of on-premise models that offer clients visibility and control over IT infrastructure. Building trust among customers gradually by delivering quality services for non-core operations such as router and network management will improve sale volumes in the long run.

“As cloud computing and virtualisation become critical differentiators, data centre vendors will look to acquire specialised cloud computing companies to give them an edge over competitors,” noted Zelba. “Future data centres in GCC, built at low-cost locations with emphasis on green best practices, will also be highly virtualised and carrier neutral.”

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