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Is a Tier 3 Talent Gap Holding Back Data Centre Growth?

Thu 8 Apr 2021

As data centre markets expand to Tier 3 locations, will a shortage of skilled workers limit potential growth?

Over the past several years a massive growth in data generated by individuals and organisations has led to increased demand for data centres. IT spending on data centre services is expected to reach 228 billion USD in 2021, and 236 billion the following year.

To meet this demand, data centre providers are improving efficiency to make better use of the facilities they have and expanding into different markets as well. Tier I markets – those with the best mix of population, location and infrastructure – include major cities like London, Amsterdam and New York. These were the initial targets for data centre construction, as they allowed a provider access to the hubs where demand was the highest, essentially providing the greatest impact for their investment.

Tier II markets – secondary targets – include areas that are still central in location and critical to data centre strategy, but are in less densely-populated areas or those that have a less-developed infrastructure. Tier II markets for data centres include Barcelona, Chicago, or Shenzhen.

Today, Tier I and II markets are fairly saturated with data centre providers. While opportunity still exists, the highest growth areas for data centre services are likely to be in Tier III locations, such as Oslo, Buenos Aires, or Jakarta.

Why Are Tier III Markets Attractive for Investment?

According to a report from McKinsey, global organisations have relied on a strategy that combines focus on developed markets (Tier I) and megacities in emerging markets (Tier II). However, in the near future, the impact of alternate markets (Tier III) is expected to grow much faster than traditional markets – resulting in a higher GDP, population, and per capita income growth in Tier III areas.

An investment in data centres in these markets now allows companies to take advantage of these trends, before increases in population and wealth drive real estate and construction prices higher.

But will data centre growth in Tier III markets be limited by a lack of available talent in these locations?

The Data Centre Talent Gap

According to the Uptime Institute, 50% of employers are currently unable to fill key data centre jobs today. By 2025, that gap is expected to grow even more, as the number of employees needed to run the world’s data centres will increase from 2 million today to upwards of 2.3 million.

Recruiting is easier in Tier I and II markets, as the higher population expands a company’s pool of candidates. A smaller market has a lower population and therefore will have fewer candidates in the geographic area. This increases competition for a limited pool of available candidates, not to mention the fact that it may be more difficult to attract a candidate willing to relocate to Tier III.

Read more: Half of UK CIOs Fear IT Talent Scarcity Post-Brexit

Talent Gap impact in Tier III cities

For every position that goes unfilled, an organisation suffers. Directly, an employment gap can cause lost revenue due to increased costs and reduced customer satisfaction. But when resources are stretched to cover employment gaps there are indirect losses as well, including lower morale, increased turnover, and reduced collaboration and innovation throughout the organisation.

Because of the difficulty recruiting for Tier III markets, as compared to Tier I and II, the impact of the data centre talent gap may be more significant in Tier III. Without significant strategy and planning, there is a chance that the talent gap will limit the growth of data centre locations and services in Tier III markets.

Managing the Tier III Talent Gap

Understanding the potential for a talent gap in emerging markets and developing a  comprehensive strategy may help a data centre provider manage it in a way that supports scalability and growth. Some elements of a talent gap management strategy include:

Process automation

With the correct tools for automation, many (if not most) data centre processes can be managed from a remote location. Limiting the number of on-site employees reduces the demand for new recruits, allowing experienced employees to manage operations from a centralised location while improving efficiency and productivity.

Travelling talent

Think outside the box to accomplish tasks that cannot be automated or managed remotely. A mobile engineer can be deployed to complete on-site tasks at a number of different locations, managing different sites on rotation. This can be a valuable tool in limiting the number of engineers required by the company, further reducing the talent gap.

Career paths

It may very well be easier to educate current employees and promote from within, instead of recruiting experienced talent from outside the organisation. The opportunity to grow skills and be promoted is a major draw for new employees, especially among millennials. In a recent study, 52% of millennials said that growth opportunities and education were the main consideration in finding a new employer. Offering a clear career path and providing educational support may help to make a company more attractive to potential employees, while at the same time planning for a future talent gap.

Of course, these strategies will not help data centres completely overcome the possibility of a Tier III market talent gap. However, by anticipating and planning for the challenge, an organisation can improve competitive advantage, and maximize the benefits of Tier III data centre expansion.


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