Executive Summary
The COVID-19 pandemic promises to be a third watershed event for the infrastructure services sector. The dotcom bubble collapse of 2000-01 in many ways gave birth to the sector we know today, while the 2008-09 financial collapse allowed the sector to demonstrate its underlying value proposition and opened the door to hyperscale’s explosive growth. The current pandemic is again proving the efficacy of outsourced infrastructure and showing how it was built for exactly this type of massive-scale event. The underlying fundamentals of the infrastructure services sector have been pushing forward continually over two decades. The current pandemic is going to be the catalyst that takes things to another level. This is not hyperbole. Things that were already in motion – closing of on-premise data centres, sunsetting of legacy systems, increased adoption of teleworking, distributed applications and work forces – and now poised to accelerate and change the demand trajectory of the sector forever. This report takes a closer look at the impact the pandemic will have on the infrastructure sector. Where is the sector headed and who will be the winners? What should operators and investors do to ensure they take full advantage of the opportunities presented?
As always, there are moving parts bubbling under the surface. Hyperscale infrastructure strategies are shifting, global markets are more of a factor and regulatory regimes are changing. All of this comes with both good and bad for infrastructure providers. It presents challenges, but as is often the case, also introduces a number of emerging opportunities.
Somewhat paradoxically, alongside the developing uncertainty, is a strengthening foundation that is locked in place. The underlying fundamentals of the sector are strong and show no signs of moving in anything but a forward direction. And the nature of the business itself, with value and margin moving into new areas, is uniquely positioned to withstand shifts in the larger macroeconomic environment and competitive landscape.
This report takes a closer look at the sector’s outlook as we enter 2020. We remain bullish on many pockets of the sector, but there are areas that demand some caution. Some or many of these questions will play out in 2020, while others will probably take a bit more time and take us beyond 2020. However, the inflection point reached remains in full effect.
