Scaling up: How strategic datacenter locations are driving business success?

In today’s hyper-connected world, the digital economy isn’t just about speed; it’s about placement. For enterprises navigating an increasingly complex global landscape, the location of a datacenter has transcended mere logistical convenience. 

It has become a strategic imperative, a foundational pillar for customer engagement, regulatory compliance, and sustainable growth. Once relegated to the back-end, datacenters now sit squarely at the core of business strategy, their physical footprint directly shaping how companies serve their customers, secure their invaluable data, and integrate into the global digital ecosystem.

As organizations accelerate digital transformation journeys, location choices are no longer about performance metric. They dictate resilience, optimise cost efficiency, and underpin long-term scalability. This profound shift is compelling enterprises to fundamentally rethink their siting strategies, placing a sharper, more strategic focus on proximity, energy sources, regulatory compliance, and robust connectivity.

For industries where every millisecond count– think high-frequency trading in financial services, seamless streaming in media, or life-saving precision in healthcare – latency is ultimate differentiator. A fraction of second’s delay can mean the difference between a successful transaction and a frustrated customer. 

Considering the burgeoning e-commerce market in Southeast Asia, where companies are deploying distributed edge facilities to ensure real-time payment verification and consistent user experiences across vast, geographically diverse regions. 

According to Gartner’s projections, by 2025, 75% of enterprise-generated data is expected to be created and processed at the edge, up significantly from just 10% in 2018. This underscores the critical need to bring compute closer to end-users. What was once an IT optimization, has now become a direct driver of competitive advantage.

Navigating the intricate web of global regulations has also elevated datacenter location to a boardroom-level discussion. With the rise of data sovereignty, particularly across the APAC, European, and Middle Eastern markets, stringent residency laws demand that sensitive data remains within national borders. 

This means, businesses can no longer solely prioritize low costs or high connectivity. They must meticulously balance global ambitions with granular local compliance requirements. For multinational giants, this often translates into a distributed global footprint, where each facility addresses specific regional data residency mandate, while contributing to a unified global infrastructure. 

Foresight and adaptability are paramount in selecting locations that meet current regulations while anticipating future legislative shifts. 

Sustainability and connectivity
Beyond performance and compliance, sustainability has emerged as a defining lens for datacenter siting. According to the IEA, datacenters now account for nearly 3% of global electricity demand, a number expected to rise with AI and high-performance computing workloads. As enterprises commit to ambitious net-zero targets, they are scrutinizing the carbon profile of datacenter sites with the same rigour they apply to performance metrics.

Regions boasting abundant renewable energy sources -- solar corridors, wind farms, and areas rich in hydropower are becoming increasingly popular. Global technology giants are actively investing and prioritizing sites that offer access to green energy grids, deploy advanced energy-efficient cooling systems, and demonstrate water conservation efforts, often seeking green building certifications. 

For businesses, the choices of where to set up shop is not just about operational efficiency; it’s a powerful statement about corporate responsibility, influencing customer perception, investor confidence and regulatory standing. 

Connectivity, too, remains a non-negotiable. Facilities strategically positioned near hyperscale cloud regions, subsea cable landing stations, and major internet exchanges offer businesses unparalleled access to international markets, and significantly reduced transit costs. 

For enterprises, physical proximity to cloud on-ramps ensures performance consistency and unlocks the full potential of hybrid and multi-cloud strategies. Consider the financial services sector, where firms like JPMorgan Chase leverage direct connections to major internet exchanges in cities like London and New York to ensure ultra-low latency trading and seamless global data flows. 

Similarly, proximity to critical subsea cable infrastructure, such as the Asia Africa Europe-1 (AAE-1) cable, enhances global connectivity for businesses reliant on cross-border data flows, from global e-commerce platforms to international content delivery networks.

The physical location of datacenters also defines business resilience. Natural disasters, grid instability, or geopolitical disruptions can result in severe downtime. To mitigate this, businesses are adopting distributed footprints across multiple seismic and flood zones, ensuring backup capabilities and disaster recovery readiness. 

Redundancy is no longer optional. It is core to protecting brand trust and business continuity. Strategic location planning ensures resilience without compromising performance or compliance.

While strategic sites deliver clear benefits, they come with higher costs for land, energy, and connectivity. Enterprises must weigh these expenses against long-term gains in efficiency and compliance. Latest research shows that as of April 2025, Mumbai continues to dominate India’s datacenter landscape accounting for 41% of the total capacity with Chennai following at 23%. This highlights that top-tier cities remain critical focal points for expansion.

Trade-offs
The trade-off requires nuanced analysis: choosing sites that balance immediate cost efficiency with future scalability. Many enterprises adopt a hub-and-spoke model, where high-cost primary hubs provide core capabilities while secondary and edge sites offer cost-effective expansion. This layered approach enables both efficiency and resilience. 

The calculus for datacenter location has been fundamentally redefined. It now combines five critical imperatives: latency reduction for superior customer experience; regulatory alignment to meet evolving data residency and sovereignty laws; sustainability outcomes tied directly to renewable energy ecosystems; global connectivity through proximity to cloud, cables, and IXPs; and resilience through geographic redundancy and robust disaster recovery planning. 

Together, these factors transform datacenters from mere cost centers into powerful business accelerators.

Looking ahead: Next frontier of digital infrastructure
As data volumes continue their exponential growth and AI workloads intensify, the strategic importance of datacenter location strategy will only escalate. The proliferation of edge computing, the rollout of 5G networks, and the emergence of sovereign cloud frameworks will fundamentally reshape how and where enterprises deploy their critical infrastructure. 

The future will see an even more granular distribution of compute, with micro-datacenters embedded within smart cities and industrial IoT environments. Enterprises that embed geographic intelligence deep into their infrastructure siting decisions – leveraging advanced analytics and predictive modelling to identify optimal locations for performance, compliance, and sustainability – will be the ones best positioned to lead in this hyperconnected, sustainability-driven global economy. 

The battle for digital dominance will increasingly be won not just by what you compute, but by where you compute it.

-- Vipin Jain, President – Datacenter Operations, CtrlS Datacenters.