For many businesses, 2020 was a fundamental year, marking the shift to a cloud-first mentality as companies around the globe embraced public cloud solutions. At the time, the cloud appeared to be an obvious choice, offering reduced infrastructure costs, scalability, and unmatched flexibility.
However, as is often the case with rapidly evolving technologies, the wider implications of such a significant shift only became apparent over time. Many companies weren’t fully prepared for the long-term consequences of migrating their data, especially regarding how vital that data truly was. In recent years, as regulations have tightened and the value of data has become more apparent, organizations are reassessing their strategies.
Today, businesses are facing a mix of pressures that are forcing them to reconsider their reliance on public cloud infrastructure. Surging cloud costs, mounting regulatory demands (both local and international), issues around data sovereignty, and geopolitical concerns regarding dependency on a few U.S.-based cloud providers are all prompting organizations to explore alternatives. As a result, the idea of “cloud repatriation”, or more broadly, “data repatriation” is gaining traction.
The movement towards repatriation: it’s already happening
There’s clear evidence that the trend of moving data back from the cloud is well underway. A 2024 CIO survey from Barclays revealed that 83% of enterprises are planning to move workloads from public cloud to private or on-premises solutions, up from just 43% in 2021. Additionally, 94% of IT leaders have already engaged in some form of cloud repatriation project, and 25% of organizations in the UK have migrated at least half of their workloads back on-premises. Within our own client base, we’ve seen a growing number of cloud-native companies realize that remaining in the cloud is no longer economically sustainable for their long-term success.
Shifting back to private cloud, on-premises, or colocation solutions offers several advantages: more predictable pricing compared to fluctuating cloud bills, lower latency from being closer to end-users, and greater business resilience due to a more diversified set of infrastructure providers.
Additionally, with some large cloud providers admitting they can’t guarantee data stays within a specific jurisdiction during transfer, these alternative infrastructure options help businesses stay compliant with data protection laws, such as those in the UK and EU, while avoiding financial penalties and reputational harm.
Maximizing the potential of private data
There’s also a growing realization that many organizations have underutilized the value of their private data. Studies show that private data vastly outnumbers public data, with a ratio of 9 to 1. This is especially concerning as AI and digital business processes continue to expand. By reclaiming ownership of their data through repatriation, businesses can have greater control, unlock more cost-effective opportunities, and customize how they use that data, ultimately extracting more value from it.
For example, while public cloud tools like Co-Pilot and ChatGPT are not private, companies using colocation and private infrastructure to build their own AI models can retain ownership of intellectual property, benefiting from cutting-edge technologies while protecting their sensitive data.
The threat of data tariffs: a changing economic landscape?
While the benefits of data repatriation are clear, there are potential hurdles ahead. As more companies consider moving their data, cloud economics could face a shift toward data tariffs. The recent introduction of tariffs, like those imposed during the Trump administration, has highlighted the global implications of trade policy. While industries like manufacturing have felt the immediate effects, the service-based economies of the UK, where data plays a central role, may be next in line.
If tariffs are applied to data transfers from U.S. cloud providers to the UK, the cost of data repatriation could rise significantly. This makes it all the more critical for companies to weigh the financial and operational risks of continuing to rely on foreign cloud providers. Beyond the direct financial impact, businesses also need to consider the potential political leverage these providers could have over their operations.
In today’s world, where data is increasingly viewed as an economic asset, companies need to carefully consider the implications of allowing foreign entities to manage their most sensitive information. The rapid shifts in global politics over the past few years show just how quickly international relations can change, and the potential economic consequences of those changes. Ensuring control over their own data will help businesses better shield themselves from external disruptions.
2025: a turning point for IT strategy
All signs point to 2025 being a crucial year for businesses reevaluating their cloud strategies. However, companies looking to move away from public cloud solutions need to be fully informed about the viable alternatives. UK-based cloud providers, for instance, may offer clear advantages, such as data sovereignty, compliance with regulations, and reduced latency, making them a compelling option for businesses.
Public cloud services, while still important, are not a one-size-fits-all solution. The future of enterprise IT will rely on making strategic decisions that account for more than just cost, embracing a mix of cloud solutions, private infrastructure, and on-premises resources that are tailored to a company’s specific needs and workloads.
Rather than a wholesale departure from public cloud, businesses are likely to adopt a hybrid model that blends public, private, and on-prem infrastructure. This approach will enable organizations to optimize performance and costs while building long-term resilience in an ever-evolving digital world.
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