The cloud computing landscape is experiencing a fundamental shift as businesses reassess their infrastructure strategies. Data repatriation has emerged as a dominant trend in 2025, driven by escalating costs, regulatory pressures, and growing concerns over data sovereignty. This movement is setting the stage for 2026 to become the year of 'repatriation, resilience, and regional rebalancing,' according to Rob Coupland, Chief Executive Officer at Pulsant.
The repatriation trend has gained significant momentum, with businesses moving workloads from public cloud environments back to private cloud, on-premises, or colocation facilities. This shift represents a quest for better control, cost efficiency, and regulatory compliance. Rather than abandoning cloud computing entirely, organisations are embracing hybrid models that combine public, private, and on-premises solutions.
For UK businesses specifically, this has translated into a notable shift from global hyperscalers to domestic providers. Recent research indicates that 87% of organisations plan to repatriate some or all of their workloads over the next two years, with data sovereignty becoming a top priority for enterprise decision-makers.
The cybersecurity landscape has significantly influenced these strategic decisions. High-profile breaches in 2025, including the notable M&S incident, have heightened awareness about data location and management practices. These events have exposed a concerning reality: many businesses lack complete visibility into where their data resides, how it's processed, and how it's backed up.
The focus has shifted from pure prevention to resilience, particularly regarding recovery speed following security incidents. This change in perspective is already influencing data centre policies and services, with disaster recovery and backup becoming standard offerings rather than optional extras.
The regulatory environment is also evolving rapidly. The UK government has introduced fast-track planning laws for data centre construction, particularly for projects classified as Nationally Significant Infrastructure Projects (NSIPs). However, Section 106 planning obligations continue to present challenges by requiring developers to contribute to local communities and services.
The Cyber Security & Resilience Bill is introducing stronger security measures and clearer regulations, but it's also bringing increased reporting standards that could prove burdensome for operators. As Coupland notes, 'The combination of positive and challenging policies creates both uncertainty and opportunity.'
Artificial intelligence has been a major driver of data centre demand, particularly in hyperscale facilities. However, as the initial AI hype begins to settle, businesses are taking a more measured approach to evaluating real-world AI applications and determining the infrastructure truly needed to support their objectives.
This maturation is bringing inference AI and sovereign AI into focus, complicating the infrastructure landscape. Edge computing is emerging as a key beneficiary of this shift, with demand growing for specialised, inference-optimised storage platforms alongside continued hyperscale requirements.
While London and the South East maintain their dominance in the UK data centre market, 2025 saw growing interest in regional locations. Government initiatives like AI Growth Zones are encouraging investment outside the capital, promoting a more distributed approach to digital infrastructure.
Looking ahead to 2026, increased availability of Edge data centres near UK metropolitan areas will open new opportunities for sectors such as smart manufacturing and transport. These regional edge facilities promise more sustainable, cost-effective infrastructure while contributing to a more balanced national digital economy.
The transformation represents a maturation of the cloud computing sector. As Coupland concludes, 'Data centre providers who prioritise transparency, regional diversification, and realistic AI enablement will be best positioned to lead the way in 2026. It will be a year for the sector to mature, rebalance, and grow stronger.'
"Data centre providers who prioritise transparency, regional diversification, and realistic AI enablement will be best positioned to lead the way in 2026. It will be a year for the sector to mature, rebalance, and grow stronger." - Rob Coupland, CEO, Pulsant
