How Telecoms and Cloud & IT Services are leading Europe’s Digital Transformation Journey

2020 was a year of drastic change and constantly adapting to new ways of living, working and communicating. For enterprises in Switzerland and across the globe, this has meant pivoting to use service providers to help them meet the growing remote user needs and this continues on into 2021.

Regardless of where they are in their digital transformation journey, all businesses have similar priorities: grow revenue, increase efficiency and reduce costs while continuing to enhance user experience. For these focuses to be realised, organisations need to future-proof their processes. Workforces that did not have the IT infrastructure in place to quickly scale bandwidth and support new connections from more locations now need to accelerate the use of digital service providers.

In this article I look to outline the findings in our fourth annual Global Interconnection Index (GXI), a market study published by Equinix in October of last year, and highlight how Telecoms and Cloud & IT services are projected to lead Europe’s continued digital transformation journey.

GXI Vol. 4 interconnection highlights for Europe

Interconnection, or the direct and private exchange of traffic between business partners, is an essential enabler of the European digital economy. Prior to last year, enterprises were projected to grow faster than service providers in interconnection bandwidth capacity. But the Equinix GXI report reveals how the COVID-19 global pandemic flipped the digital adoption patterns of these two segments.

European digital service providers have had to scale up to meet a massive increase in consumer and enterprise demand, and at the same time we have seen many of our European enterprise customers turn to service providers to help with the demand of customers and the now remote workforce.

By 2023, the GXI Vol. 4 predicts that installed interconnection bandwidth capacity worldwide could reach 16,300+ Tbps, and Europe is estimated to contribute 23% (3,782 Tbps) of that total. Over the five-year forecast period (2019 – 2023), interconnection bandwidth in Europe is projected to grow at a steady 45% compound annual growth rate (CAGR), on par with the global growth rate.

Digital Service providers have leveraged available headroom across their networks to adapt to the rising demand of enterprise and yielded in record-breaking interconnection bandwidth growth rates, exceeding prior year’s forecasts. This unprecedented amount of demand for service providers and a need for increased interconnection has resulted in Telecommunications and Cloud & IT Services combined expected to comprise over half (54%), or 2,052 Terabits per second (Tbps), of the total installed interconnection bandwidth capacity in Europe by 2023. We forecast continued change in the digital economy within our Forecast and Data paper as part of the GXI report.

Key trends driving interconnection in Europe

Below, I have outlined some of the key trends we at Equinix expect to see impact the growth in demand for interconnection across Europe. I expect these to have a major impact in Switzerland:

• Strong, steady demand for hyperscale, colocation and cloud services
• New European Commission policies aimed at pushing the growth of the digital economy.
• Public-private consortiums focused on strengthening digital innovation in the region.
• Rapid digital transformation in the Content & Digital Media (CDM) sector prior to and during the global pandemic.
• Industries that have not traditionally been digital leaders, such as the healthcare and public sectors, accelerating digital adoption to support services such as telemedicine and online learning during the COVID-19 lockdown.

To learn more about how digital leaders in Europe are harnessing digital infrastructure and interconnection to accelerate their business advantage in a fast-changing world, read the GXI Vol. 4 Europe findings.