2023 Data Centre Outlook: Challenges and Opportunities for the Industry

In 2023, the data centre industry will encounter some familiar challenges in the short term, but the overall outlook is bright.

The 2023 Global Data Centre Outlook by JLL reveals that strong demand for data centres will continue, pushing investments and growth despite numerous challenges.

Challenges Facing the Data Centre Industry in 2023

Supply Chain Issues

Companies should prepare for ongoing supply chain issues caused by geopolitical tensions and labour shortages, which result in delays to new constructions. Absorption in 2023 is expected to be lower compared to 2022 because developers have pushed back lead times from the standard of 12–16 months to more than 24 months.

Because new construction is becoming difficult to bring in on time and within budget, the market is shifting away from new builds and towards more preleasing. JLL’s report found that ‘supply chain limitations open the door to increased opportunity to purchase existing assets or sale-leasebacks’.

To alleviate difficulties in the supply chain, JLL suggests that both developers and operators must prepare for extended lead times while tackling critical path concerns and bottlenecks. Multi-sourcing strategies should be employed to minimise dependence on single providers. To adapt, users are also prolonging the lifespan of their hardware and updating servers less frequently, utilising servers for durations of up to seven years.

Labor Shortage

At the same time, the shortage of skilled labor is expected to continue to affect technical staffing in the data centre, making things more difficult – and expensive – for owners and operators.

The first issue is an aging workforce. According to the Uptime Institute, almost half the data centre workforce today has 20 years of experience or more. This means that nearly half the workforce will be eligible for retirement within the next decade that may result in many open positions, as well as knowledge loss as experienced employees leave.

Continuing high demand means that data centres keep growing, so there will be more open positions to fill. This puts businesses in competition with one another, driving labor costs higher and making it difficult to retain employees.

To help counter labor shortages, data centre operators and even governments have begun to create training programs, to help get more talent in the pipeline. These include partnerships with community colleges and universities; certificate programs; and efforts to improve female and minority representation in the industry.

Opportunities for the Data Centre Industry in 2023

The JLL report also outlined a number of opportunities that data centre businesses can take advantage of in the near future, to continue to support growth and drive business in the face of these challenges.

Sustainability

While the attention to meeting environmental goals has become a major priority for data centre operators, it is often seen as a constraint – something for data centre companies to manage. However, the JLL report paints sustainability in a different light – highlighting it as an opportunity for businesses. Climate legislation and industry initiatives are driving R&D in different areas – from power, to cooling, to improving carbon impact from design, to construction, to optimisation.

Hyperscale Data Centres

The global public cloud market grew from $9 billion USD in 2009 to $208 billion in 2019: a sustained 37% CAGR growth over a decade. That, plus the spike in demand for cloud services during the pandemic led cloud providers to explore the benefits of hyperscale data centres.

Hyperscale facilities, which house more than 5,000 servers and encompass more than 10,000 square feet, are becoming a popular choice for enterprise cloud providers. The idea is that a single, enormous facility can harness economies of scale to run more efficiently and offer opportunities to scale and meet tremendous spikes in demand.

> Read more: The expanding data centre footprint: why businesses are investing in hyperscale

The United States is currently home to more than half of the hyperscale facilities in the world. While more businesses are looking to take advantage of the advantages of hyperscale, there are also more protests associated with these enormous facilities.

Data centre businesses have been faced with a number of challenges in recent years. Enormous growth in demand, economic uncertainty, and a difficult labor market are factors that will not be alleviated any time soon. However, there are a number of opportunities that are presenting themselves at the same time, which cast a bright light on the short and long-term future of the industry.

The data centre industry continues to face significant challenges, such as supply chain issues and labor shortages, but it also presents several opportunities for growth and innovation.

By focusing on sustainability and exploring the advantages of hyperscale data centres, businesses can overcome these obstacles and drive success in the coming years. As the digital world continues to expand, the demand for data centres will remain strong, requiring the industry to adapt and evolve in order to stay ahead of the curve. Leveraging these opportunities can help data centre operators ensure a thriving future for the industry amidst the challenges they face.