Singapore, already a hosting services and data centre powerhouse in the ASEAN region, is set to see further demand for such services in the next few years as cloud adoption and remote working trends continue to rise.
The total addressable market size of data centre and hosting services in Singapore, in terms of spending opportunity, is expected to increase at a compound annual growth rate (CAGR) of 6.1 per cent between 2020 and 2025, according to the latest figures by analyst firm GlobalData.
Already, there are close to 100 data centre facilities within Singapore that serve local demand as well that of enterprises based in other Southeast Asian countries.
But it is expected that the extremely high penetration of digital technologies within local businesses, along with government-backed e-governance initiatives such as the ‘Digital Society’ project under the Smart Nation initiative, are expected to further bolster demand for data centre and hosting solutions in the country.
“The presence of [a] large number of technology-focused businesses, coupled with the government’s focus on adoption of cloud technology for disbursement of various public services will help drive data centre and hosting spending in Singapore to reach US$2.1 billion [S$2.87 billion] in 2025,” said Saurabh Daga, technology analyst at GlobalData.
Of the data centre and hosting market’s subsegments, it is anticipated that enterprise spending on colocation services is set to grow at a faster CAGR of 8.3 per cent over 2020-2025. However, application hosting and data centre services represent the larger market segment.
“Growth in the colocation services can be attributed to the rising focus on reducing IT spending on commissioning mission-critical data centre facilities,” Daga said. “Data centre colocation offers scalability, security, and cost-effectiveness for managing data needs of enterprises.
“Furthermore, work-from-home and remote working trends in the aftermath of [the] COVID-19 pandemic has also led to many of the country’s enterprises to turn towards colocation services to host their key applications to manage business continuity,” he added.
As for consumption, it is expected that the large and very large enterprise segment will jointly account for the biggest share of the total data centre and hosting spending in Singapore from 2020 to 2025. But the combined spending from micro, small- and medium-sized enterprises (SMEs) will increase at a marginally faster CAGR of 6.1 per cent over the forecast period.
“Various digitisation initiatives for SMEs such as SMEs Go Digital, Industry Digital Plan, Productivity Solutions Grant among others will be the key growth driver for spending on data centre and hosting services by the SMEs in Singapore,” Daga added.
Although further growth is expected, there a few roadblocks to new data centre developments in Singapore, most notably the government’s moratorium on new development applications, a move made as the country focuses on the development of energy-efficient data centre facilities within its borders.
Regardless, Singapore is set to retain its crown as ASEAN’s prime candidate for new data centres, even if Malaysia is likely to see faster growth in the server shipments that will fuel new data centre facilities over the coming few years.