- Infrastructure workloads are moving from global to local cloud providers, according to a recent Gartner report
- Sovereign cloud infrastructure spending will leap 35.6% year-over-year to $80 billion
- Sovereign cloud is an opportunity for telcos — but not in the U.S., Gartner said
The sovereign cloud movement is gaining momentum, as some 20% of infrastructure cloud workloads will shift from global to local cloud providers this year, representing an opportunity for telcos outside the US, according to Gartner research.
Sovereign cloud infrastructure spending will total $80 billion this year, up a whopping 35.6% year-over-year, Gartner said.
“As geopolitical tensions rise, organizations outside the U.S. and China are investing more in sovereign cloud IaaS to gain digital and technological independence,” said Rene Buest, Gartner senior analyst director. “The goal is to keep wealth generation within their own borders to strengthen the local economy.”
Governments will be the main buyers of digital sovereignty services, followed by regulated industries and critical infrastructure organizations such as energy, utilities and telecom, he said.
Biggest growth is expected from the Middle East and Africa, mature Asia/Pacific, and Europe, at 89%, 87% and 83% respectively. China and North America are forecast to be first and second place in spending this year, at $47 billion and $16 billion, respectively. Growth for both will be in the 20% range.
Europe is forecast to surpass North America in sovereign cloud IaaS spending next year, Gartner says .
"Geopatriation" is a trend — and recently coined buzzword — dropped by Gartner in a study released late last year. That study found that more than three-quarters of enterprises outside the U.S. will have a digital sovereignty strategy by 2030 and nearly two-thirds (61%) of Western European CIOs and IT leaders said they're increasing reliance on local or regional cloud providers due to geopolitical factors. More than half of CIOs and IT leaders said open source will be an important factor in future cloud strategies. These findings are the results of a survey conducted in May through July.
The sovereign telco opportunity
The drive to sovereign cloud is an opportunity for telcos — but not in the U.S., Buest told Fierce. "The U.S. hyperscalers are sovereign cloud providers to U.S. customers. For U.S. telcos, it is very hard to compete with the hyperscalers," Buest said.
However, sovereign cloud is an opportunity for telcos outside the U.S., in regions including Europe, Latin America and Asia-Pacific, Buest said. U.S. hyperscalers are not sovereign cloud providers in those areas, and local telcos are stepping up. For example, Deutsche Telekom offers T Cloud Public in Germany, the Netherlands and Switzerland, and is already benefiting from increasing demand for sovereign cloud in Europe, Buest said.
AI sovereignty for security and more
Telcos worldwide are investing in sovereign AI services to build new revenue streams and meet local demand. That's one of the findings of our recent Fierce Network Research report: "Risk, Reward and Revenue: Defining telcos' role in the AI economy."
In one example, Bell Canada expects to double enterprise AI revenue by 2028. Bell is building a "sovereign digital spine" for Canadian AI.
In the Middle East and South Asia, Pakistan launched an AI sovereignty initiative in partnership with the Dfinity Foundation in Switzerland. Qatar is making a bid for AI sovereignty, and Humain, in Saudi Arabia, cites access to the Kingdom's plentiful power as a major competitive advantage
Security is also a major driver for digital sovereignty. Enterprises and telcos internationally should be concerned about hidden biases and malware that might be contained in AI models that are controlled by China or the U.S., Chuck Herrin, F5 field chief information security officer (CISO) and customer advocate, told Fierce.