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Singapore emerging as the cloud computing hub in Asia-Pacific

Claudio Castelli and Mike Sapien | Sept. 13, 2010
Singapore has become the preferred location for data centers in the region

Singapore has been the recipient of increased investment in data centers, and MNCs operating in the region are targeting the city-state as the infrastructure hub for a new wave of cloud computing services. Despite its high real-estate costs and electricity supply risks, we believe its geographically strategic position, status as a financial center, and stable government will continue to boost its position as a favored hosting location for telcos developing cloud computing services in Asia-Pacific.

Singapore has become the preferred location for data centers in the region

Global and regional service providers have invested in data centers to support new advanced services in the region, which include cloud services. This has created a domino effect for demand: in particular, operators and MNCs require facility design expertise, network and IT infrastructure, the right staff skill levels, and an understanding of the operational requirements of data centers. The latest example is the announcement that Tata Communications is opening another enterprise-class data center for providing outsourced IT services for its customers in Asia-Pacific, as part of its $180 million investment to provide data center infrastructure and managed services in Asia-Pacific between 2009 and 2011. Other global telcos with data centers in Singapore include AT&T, BT, Verizon Business, SingTel, and Orange.

Japan , Singapore, and Hong Kong contain most of the data centers in the Asia-Pacific region. While the facilities in Japan are mainly to support its domestic market, Singapore and Hong Kong are competing to be the preferred location for hosting data centers for service providers that serve MNCs in the region.

As the major global financial hub of Southeast Asia, Singapore has strategic advantages. It has a stable government that has attracted many MNCs, and 60% of MNCs with more than 7,000 employees have their Asia-Pacific regional headquarters in Singapore. It is also where most large software application developers such as Google and Microsoft choose to establish their regional presence. Singapore is also one of the major network hubs in the region, which is attractive to both carriers and MNCs. However, it suffers from high real-estate costs and faces serious energy supply challenges.

Regionalization will play to Singapores strengths

Since cloud service providers will need to offer demanding SLAs covering realtime and critical business applications in the cloud, the geographical location of the data center is more important than ever. Having few large global data centers may allow providers to reach a large scale and take the greatest advantage of their concentrated resources. On the other hand, placing data centers closer to customers allows providers to enforce security policies, improve access to content, and reduce network latency. Finding the optimum balance between both approaches is a dilemma that telcos are starting to face. Centralization on a regional level will be the answer, and Singapore is in an advantageous position as a result. Furthermore, the choice of network partners in Singapore increases its attractiveness.


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