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Three months into 2023, what lies ahead for the IT and data centre sectors? 

Three months into 2023, what lies ahead for the IT and data centre sectors?



Rob McKernan, President of Cloud & Service Provider Segment, Schneider Electric


After the end of an extremely challenging year, 2023 began marked by inflation and rather unfavourable economic forecasts. Overall, global economies are going through a complicated moment in many aspects, mainly due to the energy crisis and the rise in prices.

Despite the difficulties, 2022 left us with valuable learnings and great investments that are fundamental in lifting the economy, while also tackling grid volatility. Three months into 2023, however, what’s changed? 

One positive piece of news is that Europe, according to Bloomberg, has fast-tracked its green transition, severing its dependence on foreign fossil fuels. The data centre and digital infrastructure sectors also continue to experience significant growth. The colocation market, for example, is expected to grow to $43.18 Billion by 2027, with Western Europe being one of the dominant forces, despite a potential slowdown in new builds from hyperscalers. 

Clearly, the role of data centres is key to a greener and more digital future, but it requires our industry to prioritise greater investment in diverse skill sets, ranging from engineering to operations, to support the growth demand, of distributed IT, edge computing, hyperscale and colocation environments.

To that effect, in 2023, businesses must evolve further with regard to sustainability. The need to answer the climate emergency has turned into the main business imperative, especially in the current energy crisis scenario. However, data shows that companies taking a lead in sustainability will attract customers and investors, and therefore, do good for the business.

In the current economy and energy turmoil, what lies ahead for the IT and data centre sector in 2023? Here are the main trends I believe will matter the most.


Continued migration to the edge to adapt to new consumer needs

More personalised, cloud-native applications and ‘multi-experience’ will create a seamless user experience with one application across a variety of digital touchpoints (mobile, tablet, wearables, car, computer, etc). All will be hot topics in 2023. These add on the new 5G and WiFi-6 networks that allow further progress on IoT and AI technologies. In fact, nearly half of all mobile subscriptions (over 5.8 billion) will be 5G by 2027, bringing computing and data centres closer to the user.

For the IT and data centre industry, this translates into an enhanced migration to the edge and distributed Cloud not only to improve the speed of connections but also the capacity of data centres. This transition will require special attention to the availability, security and management of IT infrastructures and edge data centre locations, through new software and services that allow remote monitoring and prompt response to problems.

Another direct consequence of the great growth expected in data usage this year is that it will drive even higher investment in the data centre industry, especially in new construction. In fact, the global Data Center Construction market size is projected to reach US$ 49,550 million by 2027, from US$ 24,140 million in 2020 – making data centre construction faster than ever before.


The power of digital and renewables to fight grid volatility

Growing pressures to meet consumer demand for energy and water have forced governments at all levels to take a closer look at data centres and their consumption of these resources.

The industry shouldn’t forget that data centres are currently estimated to be responsible for 1% of global electricity consumption. On average, a hyperscale facility consumes between 20 and 50 MW per year, which is enough electricity to power up to 37,000 homes, which will lead to heightened examination from governments in 2023. Moreover, the carbon footprint is another big challenge with data centres accounting for around 2% of all global carbon emissions.

Minimising the role of diesel generators in favour of new energy storage solutions, as well as reducing dependency on fossil fuels, will continue to be a primary industry focus. In addition, the current spike in energy prices and grid volatility will only increase the sector’s focus on climate change.

Alternative methods of energy storage based on intelligent software technologies and strategic power sourcing such as microgrids or batteries will evolve in the next year as key enablers of change in the sector in order to give a solid answer to both challenges.

In 2023, data centre operators need to consider the integration of digital technologies, that offer detailed and predictive analytics on all assets, with hybrid electricity solutions. 


Bridging the skills gap through diversity

Given the growth that the sector is experiencing and the huge need for specialisation, one of the trends of the sector in 2023 will be the search for talent and skills. It is predicted that by 2025 alone, the number of staff required in the data centre industry will reach nearly 2.3 million.

Dealing with the scale of the data and the complexity of the regulations surrounding data sovereignty will require knowledge of cloud computing and data centre management. Meanwhile, sustainability-related skills in the sector are still a big focus to improve in the coming year.

Creating a diverse community is key to successfully managing a data centre and driving towards sustainability goals. Additionally, supporting the workforce with training to fill the skills and talent gap is vital in order to keep evolving and fighting challenges.


2023 – a crucial year for the industry

While in the midst of a major energy crisis, and with the risk of economic recession, the biggest challenge for the IT and data centre sector in 2023 will be the volatility of the grid. Ironically enough, the industry’s major opportunity will also lie there.

Throughout the value chain, the IT and data centre sector is aware that, to evolve, it must do so through digitalisation and electrification. In 2023, businesses will need more digital tools to make quick decisions that will improve both their efficiency and resilience, as well as accelerate their sustainability commitments.

2022 has been an extremely challenging year for the industry. However, the IT and data centre sector is well-equipped to turn the tide on the energy crisis, while accelerating its path to net zero and protecting economic growth. It will be up to the businesses themselves how well and fast they adapt to innovation.


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