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Beginner’s Guide on Starting a Data Centre Business in Singapore
E-commerce and the data economy have been defining a new chapter in the world of business. As the digital landscape continuously evolves under the drive of evolutionary technology, starting a data centre business seems judicious. It’s a brilliant business idea as digital adoption is rapidly increasing the demand for data centres or DCs.
Cloud-based services are on the rise as businesses leverage big data analytics, the Internet of Things, etc. DC market forecasts include USD28 billion for the Asia Pacific by 2024 and USD5 billion for Singapore by 2026. As the go-to hub into Southeast Asia’s market, Singapore ranks second in the 2021 Arcadis Data Centre Location Index. Numerous international tech giants, such as Amazon and Google, have facilities in Singapore to host their businesses.
If you’re keen to join the data economy rush, then this handy guide is just what you need. Here, you’ll find essential details on business registration as well as compliance requirements that will help you prepare beforehand. By the end of this guide, you’ll have a good handle on how best to launch your business venture.
What is a Data Centre Business?
A DC business is one that is in the trade of providing data storage services and has two models. A captive DC model means you build, operate, and manage your own data centre. In comparison, a colocation DC model has companies leasing DC hosting services from external providers. DCs are expensive to construct; hence the most common business model is to sublet from one already in operation.
Without data centres, e-commerce will not be possible as DCs form the very node of technological innovation. Businesses these days have heavy IT operations, and DCs ensure continuous functionality. All the storage, backup, and hosting that a business needs – such as emails, big data analytics, etc. – require DCs. They physically and virtually store hardware, software, and all manner of data, connecting to enable network sharing with end-users.
Before starting a data centre business, it’s prudent to know about the currently existing categories. DCs have come a long way in terms of the space they need to house IT equipment and operations. While some outfits require massive installations, most DCs are simply a computer with server connections. Data centre types include the following:
- On-site Managed Services DCs – infrastructure and systems are leased and set up within the company’s premises but managed by a third party.
- On-site Enterprise DCs – infrastructure and systems are owned by the company and managed in-house.
- Off-site Colocation DCs – companies’ rent DC space with external set up and management.
- Off-site Cloud DCs – also external but hosted by public cloud providers.
- Modular, Hyperscale or Edge DCs – huge infrastructures wholly owned and operated by the company it supports.
- Telecom DCs – exclusively owned and operated by telco service providers.
Traditional DCs need substantial space and infrastructure as well as cooling systems, uninterruptible power supplies, etc. They require significant energy infrastructures and are known for the massive amount of pollution that they produce. However, green DCs are on the rise and aim to mitigate this drain on resources, reducing overall carbon footprints.
Why Start a Data Centre Business in Singapore?
DCs are the crux of any IT infrastructure and operations, highly essential in a data-driven economy. It is undoubtedly a must for any business looking to maintain 100% uptime continuity. Singapore is a natural choice for DCs, accounting for 40% of data centres in Southeast Asia in 2020.
Singapore has it all, from significant market size to a skilled workforce, stable governance, and competitive tax regimes. This includes top-notch cybersecurity, competitive electricity tariffs, world-class infrastructure, and the top position in global broadband speeds. Most importantly, Singapore has extensive undersea cable connectivity which also makes it highly desirable as a global connector.
Mindful of the high carbon footprint of DCs, Singapore has imposed a temporary moratorium on new DC construction. However, surging e-commerce demands will likely bring changes to this suspension in the near future. Singapore has plans to develop greener and alternative DCs such as undersea and floating data centres.
Requirements to Start a Data Centre Business in Singapore
The best way to get the business ball rolling is by registering or incorporating your company. Start by researching available business structures – 3E Accounting’s Singapore company registration article is an excellent read for beginners. The guide details the various options available such as sole proprietorships, partnerships, limited companies, or limited liability partnerships. Foreign investors can choose to go with a subsidiary, etc. – whatever you choose, do your due diligence first.
Business registration is a legal requirement in Singapore, and anyone over the age of 18 can incorporate a company. The process is streamlined and straightforward, requiring you to log in to BizFile with your Singpass account. Maintained by the Singapore Accounting and Corporate Regulatory Authority (ACRA), BizFile is ACRA’s online company registration platform.
Most modern businesses now prefer to engage professional help to ensure a seamless incorporation process. 3E Accounting offers some of the most comprehensive Singapore company incorporation packages. All our end-to-end solutions are entirely customisable, delivered with impeccable professional service for the discerning entrepreneur.
The process of registering your business will run something like this:
- Select your business structure, choose a name and register it with ACRA – do follow ACRA’s strict ‘naming rules’.
- Submit relevant documentation – such as a business address, directors and shareholders information, Articles and Memorandum of Association, etc.
- Fill up and submit the online registration form.
- Pay the relevant fees.
- Register for taxes with the Inland Revenue Authority of Singapore (IRAS).
- Open a corporate bank account, sort out business premises.
- Get protection such as cybersecurity insurance, liability coverage, etc.
Approvals for a Data Centre Business in Singapore
As a rule, Singaporean businesses do not need licenses or permits to carry out business. However, this depends on the industry, and companies that supply data centres services are stringently regulated. All data centre businesses have a duty to prioritise the safety and security of all stakeholders. This includes:
- Testing and updating all software and infrastructure security on a regular basis.
- Carrying out relevant audits and control checks.
- Complying with all standards and statutory requirements.
The rules and regulations when it comes to DCs are not readily apparent and can be complex. It is highly advisable that you engage business solution firms such as 3E Accounting to ensure thorough compliance. Overall, the following considerations apply:
- The primary legislation is the Personal Data Protection Act (PDPA) which enforces data security.
- Businesses have DC standards such as the Multi-Tier Cloud Security, Green DC Standard, ISO, etc.
- The SS564:2013 and BCA-IMDA Green Mark are mandatory accreditations.
- Your business will need energy efficiency approval from Singapore’s National Environment Agency (NEA).
- The Personal Data Protection Commission requires the appointment of a data protection officer.
- The NEA requires the appointment of an energy manager, and you must submit annual energy efficiency improvement plans.
- Additionally, your business may need safety certifications, building and environmental permits, etc.
Contact a corporate service provider to ensure you have all the approvals you heed.
How to Grow Your Data Centre Business
Digital acceleration highlights the importance of data centres with green technology thrown into the balance. DCs are amalgams of service, real estate, and technology that require both business and investment strategies to succeed. Customisation is a key factor to success as creating hybrid business models does provide a competitive edge. You can choose to niche down by offering any one of the following, for example:
- SaaS (Software as a service)
- Networks or Platforms as a service facilitate enterprise-level network access and enable developers to configure networks, etc.
- Infrastructure as a service such as storage space, servers, maintenance, etc.
Hence, you can focus on cloud-based DCs and provide services to a variety of businesses. You can also specialise as a consultancy that assists other companies in building their own DCs. What’s important is to concentrate on developing a reputation for capacity, capability and trust. The industry is close-knit, and a reliable reputation is worth its weight in gold.
Actively adopting the Green Data Centre Standard in Singapore (SS 564) is another sustainable way to stay current. Indeed, implementing new and innovative technologies is a way forward for DC businesses. Automation and smart technology, including Artificial Intelligence, can navigate the pitfalls of high energy consumption and provide innovative solutions. It creates improved credibility with stakeholders while meeting environmental goals.
Now that you have a clearer picture of the entire process, it’s time to make your dreams a reality. Starting a data centre business in Singapore can be seamless with the right professional alliance. 3E Accounting is the 21st-century corporate service provider that can provide your business with a modern edge.
All our company incorporation packages are fully digitalised, offering innovative outcomes that facilitate customisation. For all your business start-up needs, contact 3E Accounting today. Rest assured that your future is in the hands of dedicated global professionals who deliver every single time.