The Southeast Asia region (SEA) is ushering in an era of rapid digital transformation, altering the very nature of goods and services, not only on what is produced and exchanged but how it is traded, customized and delivered. Accelerated adoption of e-commerce, digital payments and the emergence of new business models are all driving factors contributing to the digital evolution of the whole economic system of SEA. Coupled with widespread implementation of disruptive technology, abundant natural resources and an expanding middle class, SEA is set for exponential growth in its digital economy supported by a substantial demographic dividend.
The region’s digital economy is expected to be worth US$1 trillion by 2030 as its young inhabitants are increasingly shopping and trading online. Digital payments have become a catalyst to the explosive growth of digital trade, with the total transaction value projected to reach US$226.6 billion this year. This is made evident through a remarkable rise in internet subscribers over the past nine years, surging from 24.6 individuals per 100 in 2012 to an impressive 79.5 individuals per 100 in 2021. The rising growth of interconnection and the digital marketplace of emerging economies is materializing in ever-increasing demand for service provider enterprises such as telecommunications, cloud services and media companies. Global service providers must consider how they can assist SEA businesses with expanding their go-to-market capabilities and building out their digital infrastructure or risk losing out on emerging opportunities in Asia’s vibrant markets. We launched an eBook to uncover what’s needed to build an agile digital infrastructure to achieve business objectives.
Service providers’ success in emerging markets is dependent on rich and robust data infrastructure
Startups are drivers of innovation and growth, playing a critical role in developing rapid solutions and helping countries in the region shift fully towards digital work, education and services. Venture capital investments in SEA’s digital economy reached an all-time high of US$27 billion in 2021 and continue to gain momentum as the region shapes itself to be a hotbed for upstart businesses engaging in digital transformation. The proliferation of new businesses is contributing not only to the growth of the SEA digital economy but also to the demand for interconnection services. Service providers play a pivotal role in helping enterprises of all sizes launch new digital services, reimagine their digital infrastructure and expand their market capabilities to meet evolving market and customer expectations.
As service providers in SEA strive to meet the rapidly increasing demands of enterprises and startups for interconnection, the need for platform ecosystems to facilitate data exchange beyond their internal systems will inevitably rise due to digital transformation. Service providers adopting a platform approach can benefit greatly by tapping into neutral interconnection platforms like Platform Equinix® to enhance their revenue opportunities and reduce their costs in service delivery. Leveraging Equinix’s digital infrastructure, service providers can operate within a rich and robust ecosystem that facilitates seamless collaboration and low-latency data exchange among participants.
Startup enterprises like Tokopedia are then able to leverage Equinix Fabric® to bypass public networks and connect privately, securely and directly through cloud service providers on demand anywhere. Software-defined interconnection can widen and deepen the range of partner choices and customer bases, allowing service providers to scale their operations more effectively. By tapping into an extensive network of interconnected businesses, service providers can capture new value in adjacent markets and leverage their close proximity to an increasingly digital ASEAN population to enrich service offerings and accelerate time to market.
Enabling hyper-local digital approaches for a service-led strategy
The service industry in Asia is shifting from traditional product offerings to a diversified service approach. Service-led strategies offer engaging and seamless customer experiences that help businesses differentiate themselves in a competitive market through digital platforms. One of the key benefits of adopting a services-led approach is the ability to create predictable revenue streams and enhance customer retention. Data insights from internet of things (IoT) and artificial intelligence (AI) can help service providers proactively identify customer needs and optimize their offerings. According to the Equinix 2023 Global Tech Trends Survey, while 83% of IT leaders in the Asia-Pacific are using or planning to use AI in IT operations, 51% expressed hesitancy in AI adoption citing an increase in OPEX costs. Implementation costs of AI and disparate levels of interconnection maturity in the SEA region must be addressed to create an even playing field in its rising digital economy.
Equinix is working with digital service providers like Amazon Web Services, Google Cloud and Cisco in SEA to overcome digital hurdles by providing a highly interconnected and secure environment for businesses and organizations to utilize advanced technologies like AI as a Service. Robust digital infrastructure can exponentially raise the capacity of service providers when collecting, processing and analyzing data, enabling them to gain valuable insights and deliver personalized experiences to their customers. With Equinix Metal®, service providers can further close the digital divide by deploying at the edge in proximity to their customers. With robust IT infrastructure at low latency, service providers can offer direct access to both private and public cloud environments for their customers to implement customized hybrid multicloud architecture. Bare Metal as a Service also lowers barriers of entry for service providers looking to expand in the region and form new partnerships, with the flexibility to also leverage Equinix Network Edge to quickly add branded virtual network services to their environments when needed.
Sustainability and interconnection go hand in hand
SEA countries are uniquely positioned to act on climate change and leverage decarbonization as a driver of economic growth. With 75% of its GDP exposed to climate disruption, the region has the most to lose due to inaction and much to gain if a substantial concerted effort can be made over the next decade. In order to meet stakeholder ESG expectations (Environmental, Social and Governance), service providers across SEA need to align with domestic regulations and standards to become like-minded business partners with local organizations. This drive stems from customer expectations, investor demands and government sustainability mandates, with 77% of enterprises in SEA stating that sustainability is already part of their business strategy. Notably, all countries in the region are members of the Sustainable Stock Exchanges (SSE) Initiative and have issued green bonds at the government or corporate level.
Leading digital infrastructure providers in SEA have taken significant steps towards sustainability. They have signed renewable power purchase agreements and achieved low data center Power Usage Effectiveness (PUE) ratios that many organizations lack the scale to implement independently. At Equinix, sustainability and performance-based metrics guide technology deployment, ensuring minimal electronic waste and reducing redundancy of underused server capacity through optimization and a data-centric approach. Equinix is committed to growing interconnection in SEA to sustainably achieve its goal of ensuring 100% renewables coverage for its entire global footprint by 2030.
Supporting SEA’s digital economy with agile digital infrastructure
SEA has demonstrated remarkable resilience and optimism despite the challenges posed by the pandemic. Its subsequent economic recovery has given governments and business leaders in the region an opportunity to focus on key areas of progress such as digital transformation and environmentally sustainable economic growth, recognizing their increasing importance. Now is the time for service providers to actively engage and assess whether their digital capabilities and sustainability strategies align with the demands of SEA’s digital economy. By partnering with Equinix, service providers can grow their digital capabilities sustainably and position themselves for success in SEA to unlock the vast potential of this thriving region.