Poland as the technological backbone of Europe for colocation and data center services

Poland’s position in the European data center and colocation market is increasing, and this trend is expected to dynamize. The development of artificial intelligence (AI), the Internet of Things (IoT), advanced robotics, and the industry 4.0 revolution, among others, involve the need to transfer and process vast amounts of data. With significant increases in energy costs and the price of land and equipment for new investments, companies in the EU are increasingly willing to move away from in-house IT infrastructure maintenance models to outsourcing such services to specialized data centers. Moreover, they are looking for alternative markets to collocate their ICT infrastructure.

Problems of hegemons

Research firm Arizton has analyzed data relating to investments and infrastructure conditions provided by European data center operators. The analysis reveals that the main factor driving colocation services growth is clients who optimize operating costs while benefiting from an additional range of IT support services unavailable in-house. This is a convenient solution, especially since companies can rarely afford to set up their own data center, which would guarantee adequate computing power and safeguards against power outages or the effects of physical disasters.

Arizton indicates that the European colocation market will reach a compound annual growth rate (CAGR) of 6.19% between 2022 and 2027. According to the experts responsible for compiling the report, 2022 was a record year regarding the sector’s value. It is estimated that the valuation reached $8.2 billion. And this is just the beginning of the good news. At most, five years from now, the value will reach $11.8 billion – an increase of 44%.

– The demand for colocation services will grow in the most mature markets like Frankfurt, London, Amsterdam, Paris, and Dublin. However, in the case of these metropolises, it is becoming increasingly apparent that there will be a problem with a shortage of an adequate number of available facilities to meet the demand requirements mainly due to legal limitations and lack of available power capacity that would allow for the commissioning of more facilities. At the same time, the overall demand for colocation services outside these markets is growing dynamically. There are several reasons for this situation: the high cost of maintaining data center facilities, skyrocketing energy prices, and the deficit of land and energy resources on which new data center campuses could be built, says Wojciech Stramski, CEO of Beyond.pl, a polish secure and sustainable data center and cloud services provider.

According to experts, the colocation market is already highly competitive, and many providers invest in new facilities and expand existing ones to meet market demand growth. Expanding existing data center campuses can sometimes be more profitable from an investment perspective than upgrading facilities that have been on the market for more than a decade, where sustainability and energy efficiency upgrades have receded into the background. Today, most EU data centers require costly upgrades of infrastructure or systems. In addition, new players are investing millions of euros in building new facilities in Western European countries and the whole continent. According to Arizton, the conditions created by the authorities will determine where the newest data centers will be built. Key factors for recent locations will be, among others, the availability of investment land equipped with power and telecommunications infrastructure and ease of legislative procedures surrounding the construction of such facilities.

Poland in pursuit of Europe’s top

Although Aritzon calls Poland an “emerging market,” it also places it in the vanguard of countries that will record a marked increase in demand for colocation services. Poland is already the definite leader of the CEE region and in a moment, will begin to catch up to the top markets of the continent. Poland is being looked at with increasing interest by the most prominent players in the data center industry, manifested by the emergence of more local zones, i.e., zones of availability, allowing for data processing in accordance with local legislation, using local IT infrastructure including computing power, storage, database, and other professional services.

It is estimated that, the cumulative annual growth rate (CAGR) for the data center sector in 2022-27 will be 6.88% in Poland, which is higher than the German market growth rate (4.67%), the Slovak market (5.57%), and the European average (6.19%). The report’s authors note that Poland can already offer a comparable quality of colocation services to mature markets.

– Among others, the key competitive advantages of data center colocation services in Poland are: service quality on par with that in the West, the geographic location providing optimal latency for the purposes of communication between the East and West, modern and secure data center infrastructure, and a possibility of realizing significant cost optimizations. Not only do we have qualified IT specialists, but some data center facilities are among the top in Europe in terms of their security level and the Power Usage Effectiveness index (PUE), says Wojciech Stramski, CEO of Beyond.pl.

Green data centers and IT solutions can help reach growth targets

According to Arizton’s experts, the area of focus that will be most important in the European data center market in the coming era is environmental responsibility. The experts foresee an end to data centers focusing solely on increasing computing power while marginalizing energy efficiency and ecology.

– Such an approach will only exist in the short run. Business is paying increasing attention to minimizing the carbon footprint related to the maintenance of IT infrastructure, so it is becoming a standard on the market to select data center partners that meet low CO2 emission requirements. Looking to the future, in addition to data security and high performance, respect for the environment will be the data center market’s standard. What is at stake is compliance with legal requirements and, above all, our joint responsibility for the quality of life of future generations., adds Wojciech Stramski from Beyond.pl.