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Is co-location the key to unlocking the potential of data centres?

Retain full control of your server operations while efficiently managing costs

22 September 2022

Learn how businesses use co-location to meet the demands of rapid digitalisation—without the need to build out their own data centres.

3D rendering of server network connections in a data centre room

The Asia-Pacific region (APAC) is seeing an all-time high demand for data centres, due in part to the accelerating effect of the COVID-19 pandemic on digitalisation. 

The pandemic helped speed up the adoption of e-commerce and finance technologies throughout the world, revolutionising the way people shop and pay. The resulting rise in remote-first and hybrid work made cloud computing the corporate standard, in part due to greater demand for video conferencing and other cloud-first digital services.

All of these developments require the support and processing power of data centres. Demand for data centres continues to grow exponentially, primarily driven by cloud computing and consumer mobile internet. In 2021, the market for hosting, storage, and cloud computing in APAC grew by more than 150%. Globally, the market was valued at US$405.65 billion in 2021, and is projected to grow from US$480.04 billion in 2022 to US$1.71 trillion in 2029, with a compound annual growth rate (CAGR) of 19.9% during the forecast period.

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Southeast Asia’s vast population of internet users, stable economic growth, and consistent government support for Industry 4.0 and 5G continue to drive interest for data centre development. APAC remains one of the most dynamic data centre markets worldwide, seeing increased investments from both hyperscale operators and co-location providers.

The four Tier 1 markets for data centres in the APAC are Singapore, Hong Kong SAR, Greater Tokyo, and Sydney. Of the four tiers of data centres, Tier 1 data centres function at basic capacity, with a single path for power and cooling and no redundancies and backup components. 

Hyperscale cloud providers primarily drive demand for data centres, given their requirements for bigger facilities and multiple site deployments. Data centres in APAC are also attracting massive investor interest, with direct investments reaching US$4.8 billion in 2021.

But with investor interest comes investor scrutiny. Data centres in APAC have come under fire for their power-hungry operations, and must now find ways to manage their power consumption in an effort to curb their carbon emissions and appeal to more environmentally conscious investors. 

Singapore, for one, instituted a moratorium on the development of new data centres in 2019, which was only lifted in 2022 to accommodate only “data centres that are best in class in terms of resource efficiency,” according to Trade and Industry Minister Gan Kim Yong. Prior to the moratorium, the Ministry of Trade and Industry (MTI) estimated that data centres consumed about 7% of Singapore’s total electricity consumption in 2020.

Over the next two years, data centre operators in APAC will focus on shifting to renewable energy sources and leveraging technologies, such as AI-controlled cooling innovations as well as liquid immersion cooling (LIC), to reduce power consumption and minimise e-waste.

Co-location: unlocking data centre benefits for growing APAC companies

Photo of IT engineer and technician discussing technical problems in the server room of a data centre facility

Today, having a data centre is critical for business continuity; without it, companies will not be able to keep pace with the demands of digitalisation. 

Data centres provide today’s businesses with a specialised facility that houses massive amounts of data, enables diverse applications, and runs complex workloads for organisations. Without data centres, organisations will have no place to house their application servers and storage devices, nor the ability to process and support cloud-based applications and services. For organisations that depend on processing information for their clients, the data centre is the business. 

While experts say data centres are close to becoming obsolete, this is far from the truth. Even cutting-edge digital technologies such as cloud computing, machine learning, artificial intelligence, the Internet of Things (IoT), and even the metaverse still need the storage and processing powerhouse of data centres. What goes up (on the cloud) must come down (to a data centre).   

The rapid expansion of data centres in APAC opens up opportunities for businesses looking to diversify and expand their IT infrastructure. By taking advantage of co-location services, companies can bypass the challenges that come with building out an on-premise data centre.     

Co-location allows companies to rent space in a data centre facility for their servers and other computing hardware. Think of it as a multi-tenant office building or apartment complex, just for computer hardware and IT infrastructure. 

Typically, the co-location facility provides the real estate, power, cooling, network bandwidth, and security measures, while the locator provides storage and server operations. There can be multiple locators in a single co-location facility, so availability, redundancy, and security are of utmost importance.

Portrait of male IT specialist using laptop in data centre

Outsourcing data centres to external vendors through co-location services has multiple benefits. 

For one, it promotes efficient use of real estate, manpower, and energy as data centre resources are shared among the vendor and other co-locators. It also significantly reduces operating costs compared to building out an on-premise data centre. And given the lack of land and the construction regulations in premier data centre markets, such as Singapore, co-location is the practical way to go.  

With co-location, even if the data centre is set up with a third-party IT provider, the locator company still maintains and manages their server operations. As such, companies are ensured business continuity and disaster recovery without the complexity of maintaining their own data centre.  

Through co-location, companies can also test out new markets by leveraging the presence of data centre operators in certain markets. This helps companies circumvent micro-location challenges present in certain markets, such as risks posed by natural disasters and geographical hazards, as well as complications caused by real estate and construction regulations.   

Companies can also take advantage of high-performance network connections in co-location facilities. With co-location, companies can also offload the security and compliance burden to the data centre operators. Depending on the provider, co-location facilities can provide both heightened physical security for hardware and infrastructure, as well as cyber threat monitoring for cloud computing services and network connectivity.

Aerial view of Singapore city skyline at sunset

Looking to give co-location services a try? Here are some things to consider when selecting a co-location provider:

  • The co-location data centre fits your business needs and your project requirements. 
  • The provider lets you know costs upfront and helps you review and calculate the cost-saving benefits of co-location with precision.
  • The co-location data centre has sufficient and stable network connectivity.
  • The provider offers consulting and customisation for security requirements, as well as migration services for outsourcing to the cloud.
  • The provider allows and encourages the viewing of co-location data centres in advance to address questions and concerns regarding security and compliance.
  • In rare occasions, the provider must also be able to host legacy IT infrastructure in co-location data centres. 

T-Systems hosts a robust co-location service through its data centres in APAC, two of which are in Singapore. As a mature market with a wealth of local and global operators, Singapore remains one of the most global data centre hubs in APAC.

T-Systems has two Tier 3+ high-quality data centres in Singapore, both of which meet the highest security and management standards, with the addition of redundant power supply for server uptime. With T-Systems co-location services, companies retain full control of their data and server operations down to the infrastructure level, meeting all regulatory requirements for IT operations.


If you want to ease the burden of maintaining an on-premise data centre, then co-location might be a viable solution for you.

Co-location promotes the efficient use of resources without sacrificing security and control over server operations. For small to mid-size enterprises (SMEs), co-location allows them to enjoy the full benefits of data centre facilities at a fraction of the cost. Through co-location, organisations of all sizes can be assured of the availability, redundancy, and security needed for business continuity and disaster recovery.  

Securing reliable co-location services for your operating data centres need not be a pain. As your trusted IT partner, T-Systems offers experience-based advice on buying data centre resources and provides helpful co-location services. Talk with us today to know more about how we can help you gain multiple benefits with our co-location services.

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