Covid-19 and its Impact on the Data Centre Industry

The media is, understandably, full of stories relating to the negative impact of COVID-19 on our society. That is in both human and socio-economic terms.

However, statistics indicate that some sectors of the economy have seen financial benefits from this public health disaster. One of those is the data centre environment.

I’ll explore that in what follows and examine how it might be possible to extrapolate the current position to give a view forward.

Statistical impact of COVID-19 on telecoms

As one might have expected, the almost universal global lockdown resulted in a massive increase in various forms of ‘virtual world’ traffic. That is clearly visible in a plethora of statistics, just a few of which I’ll sample here:

  • in the period February 2019-20, around 30-35% of UK online users utilised video call facilities at least once per week. By May, that figure had increased to 71% (Source: Ofcom);
  • EE’s network reported a 45% increase in voice and video traffic after the lockdown (Source: EE);
  • UK internet traffic increased overall by nearly 79% between February and March 2020 (Source: Fastly).

According to some figures, around 80% of network traffic is still leisure related but the above figures also show a very significant increase being driven by business demand and more specifically, distance working.

However, this period hasn’t just been a challenge for network traffic capacity planners. It also brings into focus what has been happening in the data centre world – both pre and post COVID-19 lockdowns.

Evidence for COVID-19 impact on data centres

Admittedly, it is tricky to disentangle the general background data centre statistics from those directly attributable to COVID-19.

Even so, it seems clear that demand is growing rapidly. For example:

  • Cogent reported a very significant increase in data centre bandwidth demand from their corporate sector clients. This clearly seems to be as a result of increasing home working leading to commensurate demands for increased access to corporate systems from remote (i.e. not normal place of work) locations (Source: Fierce);
  • Microsoft reported an eye-watering increase of 775% in demand for their Cloud Services in March 2020, based upon those locations practising social distancing measures including home working (Source: Forbes);
  • Sydney has reported a 76% increase in demand for data centre space over recent months (Source: Sydney Morning Herald).

It would be possible to continue at some length but I think the point is clear. COVID-19 has been a major factor in driving a surge in demand for IT support and most notably that associated with telecoms, data centres and Cloud Services.

Is this consistent or anomalous?

It’s possible to dismiss this surge in demand as being an atypical reaction by society and business to the lockdowns and global crisis. Some argue that normality will return once a vaccine is available, with city centre and centralised workplaces becoming the norm again.

That assumption may be flawed though. Before eagerly anticipating an imminent return to pre-COVID ways of doing things in the IT environment, it would be prudent to keep in mind:

  • while we might hope that a vaccine will be available for mass use sometime in 2021, the exact dates are unknown. As at the end of August 2020, there is no proven ‘ready-to-go’ option on the table;
  • even once one is, the lead-times to full production and a mass vaccination programme are likely to be extensive;
  • it is far from clear that a single-shot vaccine solution will work. Some experts are suggesting that coronaviruses mutate and that vaccinations may need to be annual, just as they are for influenza. Even the WHO is cautioning against unrealistic expectations (Source: BBC).


These factors matter for multiple reasons, the most significant of which is public confidence – meaning in this case, the confidence of employees, customers and providers.

That, in turn, is important because the evidence from all over Europe is now clear.

Having got used to working from home in relative safety for many months now, people are positively resisting calls to return to their normal offices and work locations. That shouldn’t be surprising if doing so, in conjunction with the associated commuting, remains a serious risk to their health and that of their families.

However passionate or perhaps eventually threatening government and employers’ rhetoric might become, a mass return to old working practices might be a long way off – if indeed it ever returns. For example, whatever the government might say, many employers won’t feel they’re likely to get the best out of people who’ve been force-marched into the office against their will.

Short of an unexpected miracle on the vaccine front, this problem is unlikely to go away in the short to medium term.  

What do these data mean for data centre corporate investment and positioning?

I’d like to counsel against seeing the massive increase in data centre demand as being entirely attributable to COVID-19. The evolutionary trends towards increased co-location and data centre leverage were very visible long before COVID-19 appeared.

However, it seems clear that these processes have been accelerated by the unexpectedly vast and sudden growth in various forms of distance working and e-commerce that came about as a consequence of the disease.

I suspect we’re likely to see:

  • while the ‘crisis management’ headline exponential growth demands of the 1st-2nd quarters has eased, existing distance working and e-commerce trends will continue to grow organically;
  • this will lead to an ongoing increase in demand for data centre (and Cloud/telecoms) services. Some sources are citing a projected compound annual growth rate within the data centre industry of around 10-15% (Source: Datacentre News);
  • increasing demand for consultants and IT personnel with experience of co-location, data centres and general outsourcing. These skills are already in short supply and some stresses on timescales and costs must be anticipated;
  • the pressures on data centres’ capacity and telecoms infrastructures will continue to increase. Whilst a return to the slightly media-exaggerated technical ‘collapses’ and service degradations of earlier in 2020 is unlikely (in fact, the industry coped exceedingly well on the whole), securing bandwidth and space will increasingly become a top priority for enterprises;
  • organisations needing to become faster and be more effective in their migration planning to data centre services;
  • there are some global supply chain issues on certain technology components arising from COVID disruptions and the increased demand. To manage these out will require exemplary forward planning by the data centre service providers if they are to avoid being caught out by a frightening combination of increased demand and insufficient availability of resources to cope with it.

Overall though, the future for data centre services providers looks promising.