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Colocation In Emerging Markets: Opportunities And Challenges

Colocation In Emerging Markets: Opportunities And Challenges

Colocation is a popular solution in emerging markets. Providing colocation solutions to these underserved areas presents both opportunities and challenges. Here is a quick guide to what you need to know.

Market trends in colocation adoption

Here are five of the key market trends in the adoption of colocation solutions in emerging markets.

Internet expansion

One of the main drivers behind the increased use of colocation has been the expansion of the internet in emerging markets. As more individuals and businesses go online, so the demand for online services increases. This in turn fuels the demand for the infrastructure needed to host them and, hence, colocation.

The move to the cloud

Similarly, the expansion of internet access means that it is now practical for businesses in emerging markets to make the move to the cloud. Using colocation provides a straightforward and cost-effective route to implementing private clouds.

The growth of edge computing

Edge computing has particular relevance in emerging markets as it can significantly reduce the burden on network infrastructure, both private and public. The fact that it also minimizes processing times is a useful bonus. There is hence growing demand for colocation providers that can support edge technology.

Sustainability concerns

As in established markets, sustainability concerns often strongly influence purchasing choices in emerging markets. This means that potential clients are increasingly likely to want (or demand) to see evidence of colocation vendors prioritizing sustainability.

Regulatory compliance and data security

The evolving regulatory landscape in emerging markets is prompting a sharper focus on regulatory compliance and data security within colocation services. Providers are investing in robust compliance protocols and security measures to meet the specific regulatory requirements of these markets, addressing concerns related to data protection and privacy.

Challenges and solutions

Here are five challenges faced by colocation providers in emerging markets and potential solutions for them.

Infrastructure limitations

Colocation providers generally need to take a three-pronged approach to addressing infrastructure limitations.

The first step is to be extremely careful with site selection. Providers must robustly assess the local infrastructure, its reliability, and its ability to support redundancy. The second step is to equip the colocation facility so it has a high level of redundancy. In addition to implementing redundant infrastructure, colocation providers should aim to have service contracts with multiple suppliers.

For power, colocation facilities should aim to generate as much as possible of their energy on-site. They should also have UPSs and backup generators. Moreover, they should aim to maximize the energy efficiency of the facility. This lightens the load on the infrastructure and also means backup power sources will last longer. As part of this, they should implement robust monitoring and predictive maintenance.

The third step is to look for opportunities to propose and support improvements to local infrastructure. This is likely to involve building relationships or even partnerships with key stakeholders such as local governments.

Financial constraints and investment challenges

Colocation providers in emerging markets should aim to foster strategic collaborations and explore alternative financing options. Seeking partnerships with local governments and/or private investors, or leveraging joint ventures enables shared investment responsibilities.

They should also aim to protect themselves against currency fluctuations as much as possible. For example, they could set their prices in US dollars or another (reasonably stable) global currency.

Moreover, colocation providers in emerging markets should be careful to ensure that their pricing is optimized for the market in which they are operating. This may require them to develop new pricing models, which may, in turn, impact their overall financial planning.

Intense competition

Implementing innovative marketing strategies and focusing on unique value propositions help to carve a distinctive market presence. Additionally, strategic partnerships with local businesses or technology providers can broaden service offerings. Leveraging advanced technologies, such as edge computing or tailored solutions for specific industries, allows providers to cater to specialized needs, setting them apart in a crowded market.

Complex and evolving regulatory environments

As in established markets, regulatory and legal issues are usually best handled by specialist staff. In this case, that would usually mean local compliance experts and/or legal counsel. Colocation providers are also likely to benefit from proactively building relationships with regulatory bodies and/or local governments. At the very least, they should know how to keep informed of changes and where to get informed answers to any questions they have.

Limited availability of skilled personnel

In the very short term, colocation providers can bring in staff from other areas to fill skills gaps. Over the longer term, colocation providers will need to look at in-house training and/or partnerships with local institutions to develop the talent they need. This can be combined with remote support that can operate from anywhere.

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