Published by BusinessToday, image by Data Centre Dynamics.
Alongside the boom in consumer-level Artificial Intelligence (AI) has been the blossoming of data centres, which are essential for AI development. In recent years, the expansion of data centres has been accelerating, and it is expected that their storage capacity will slightly more than double from 10.1 zettabytes (ZB) in 2023 to 21.0 ZB in 2027 (JLL Research, 2024).
The economic impact of data centre expansion cannot be ignored, and governments are working hard to capitalise on this growing trend. According to Digital News Asia (2024), Malaysia’s data centre development pipeline consists of 1.2GW of capacity, representing 600% growth over the next five years.
Moreover, the expansion of data centres is projected to bring us billions in revenue if realised, with major conglomerates already making long-term investments. For instance, Amazon is planning to invest an estimated USD6.2 billion through 2038 as part of their long-term commitment in Malaysia (New Straits Times, 2024).
However, how much would these foreign investments ultimately help Malaysians? More specifically, will data centre expansion create enough jobs for Malaysians to uplift their financial status?
After all, job creation, especially in high-skilled job, is one of the most effective ways of improving our economy, which will also be immediately felt by ordinary people.
Realistically speaking, data centres themselves do not create many new jobs due to the relatively remote nature of the work and increased automation resulting from technological advancements.
Some estimate that a data centre creates between five to 30 jobs, while others suggest they create about 30 to 50 permanent positions on average, with some larger facilities employing up to 200 employees (Area Development, 2015; Good Job First, n.d.).
However, the effect data centres have on job creation is not limited to the operation of the facilities alone. According to Uptime Institute (2021), as many as nine different data centre job domains are required for the five stages of the data centre life cycle, from system and building design to construction and operation.
Therefore, Uptime Institute estimates that global data centre staff will grow from 2 million full-time employee equivalents (FTE) in 2019 to 2.3 million FTEs in 2025, with 140,000 of the new positions in the Asia-Pacific region.
At the same time, Uptime Institute noted that some firms would make use of remote and automation technologies, as well as AI, to reduce the staffing needs (2021). Thus, the actual number of direct jobs created by data centres could be less than their estimation.
In Malaysia, the government from 2021 to 2023 has approved RM114.7 billion worth of investments in data centres and cloud services, which reportedly generated over 2,325 high-value jobs in specialised fields (The Edge, 2024).
Our Minister of Investment, Trade and Industry, Tengku Zafrul Abdul Aziz, also stated that the construction of Google’s data centre, which would bring RM13.3 billion into Malaysia by 2030, could create more than 64,000 high-value jobs (The Star, 2024).
While there is no telling how the ministry arrived at this number, it was likely estimated using data from United States of America (USA). According to reports, Google’s data centres in the USA have a 5.9 multiplier effect, indicating that for each direct job created, they have generated an average of 5.9 indirect jobs (The Star, 2024).
Even though it was just an estimation, the amount of job creation can certainly be realised via various targeted strategies and incentives.
While the manufacturing sector, together with construction sector, could also benefit from data centre boom, these benefits are relatively short-term. Moreover, occupations in these sectors are often filled by foreign workers, as they are more willing to take on difficult and menial tasks at lower salaries than locals.
The focus should be placed on the indirect job creation that comes from sectors not involved in the construction of data centres—for example, tech companies that utilise the services provided by these data centres.
Data centres themselves are already an attractive point of interest to lure in some of the global tech giants. Together with our business-friendly policies, we should see a further increase in foreign tech companies setting up in Malaysia.
With more tech companies trying to make use of these new tools, the demand for ICT-related technicians and engineering personnel could increase. This increase would occur alongside the need for workers to maintain our key infrastructures due to the massive rise in network traffic and energy consumption.
Speaking of energy consumption, one massive and relatively unexplored opportunity regarding data centres—which may seem counter-intuitive—is their potential in fast-tracking our net-zero initiatives, and in turn, their potential to neutralise their own greenhouse gas (GhG) emissions.
Data centres are extremely resource intensive. They require an enormous amount of electricity and water to run consistently without hurdles. However, with the rate of global temperature increase exacerbating climate change, there is a need for every country on Earth, including us, to plan ahead by transitioning to renewable energy.
Enticing firms operating data centres, or making it a legal requirement for them, to invest in the renewable energy and water conservation sectors will certainly accelerate our progress in solar power expansion and water conservation efforts.
The tech giants might be able to provide a helping hand if we are considering integrating nuclear power into our energy mix, as Google and Microsoft, among others, are looking into utilising nuclear power as their main source of electricity (The Guardian, 2024; World Economic Forum, 2024).
Tengku Zafrul Abdul Aziz revealed earlier that the government is now working on introducing new guidelines aimed at improving power and water usage in data centres, with plans to use data from Google as benchmark of effective usage (New Straits Times, 2024a).
The environmental conservation efforts by these companies would require a significant increase in manpower and technological advancements in energy sector to be viable, which would, in turn, generate occupations in the STEM sector to be filled.
The job creation capabilities of data centres (at least for indirect jobs) should never be in doubt. However, concerns over whether we can fill these positions are looming over our heads. Essentially, the issue revolves around our lack of quality and quantity in STEM students.
This has been the bane of Malaysia for the past few years. The recent report of the World Intellectual Property Organisation (WIPO) on Global Innovation Index (GII) has highlighted the fact that our performance in education has been in constant decline, with PISA scores and tertiary enrolment rates continuing to suffer.
Together with another bane of Malaysia, which is brain drain, we have lost too much of our potential high-skilled workforce.
The government’s recent focus on Technical and Vocational Education and Training (TVET) could help mitigate the problem to a slight extent, as Uptime Institute (2021) has made clear that not all jobs in data centres require extremely high educational qualifications.
However, TVET alone, in the long-term, is insufficient to supply the required workforce needed not only to run data centres but also to operate the businesses that would be utilising these data centres.
This is the major hurdle that the government has to overcome by reforming our education system, ensuring that the industries surrounding data centres will not face worker shortages in the years to come.
Chia Chu Hang is a Research Assistant at EMIR Research, an independent think tank focused on strategic policy recommendations based on rigorous research.
