The decision by UK voters to leave the European Union has created a period of uncertainty about the role of London in the multi-tenant datacenter and hosting markets, according to a new report by 451 Research.
“Historically, London has offered an ideal base for local, regional and international firms to provide colocation, hosting and cloud services to the rest of Europe,” said Rory Duncan, Research Director for European Services with 451 Research. “This status is now at risk – prompting some providers and their customers to consider other locations such as Frankfurt or Amsterdam for ease of doing business within the EU.”
In its latest report on the London Multi-Tenant Datacenter (MTDC) & Hosting Market, 451 Research outlines the potential disruption facing service providers and how they are likely to respond.
“We know that multi-tenant datacenter providers focus on bringing space online in a just-in-time manner,” said Penny Jones, Senior Analyst, European Services. “But while this means that many providers are prepared to weather the storm if demand is reduced in the short-term, longer-term investment doubts are likely to affect contract renewals for a number of enterprise customers.”
Although London acts as its own microcosm in terms of financial wealth, UK-wide dynamics – including public sector austerity, market volatility and Brexit uncertainty – still influence economic, social and spending policies.
While market growth in the UK has led to consolidation across the MTDC, cloud and hosting markets, 451 Research expects to see further shifts as a result of Brexit and an increasing focus on data regulation and sovereignty.
Enterprises across Europe – and especially in the UK – are gearing up for a move to the cloud, offering new market dynamics that change the landscape for all providers wanting to serve the market from London.
International hosting firms have historically used London as their European base, expanding their presence via established networks of carrier-neutral hotels into the larger economies of Western Europe. The Brexit vote creates potential uncertainty around this strategy, possibly prompting providers to consider other locations.
Firms such as HSBC and Deutsche Bank had indicated earlier in the year that some activities would move abroad after a ‘Leave’ vote. While businesses hope that the period of disruption is short- to medium-term in nature, it remains to be seen how Brexit will affect the IT outsourcing and services industries in the long term.