Jamieson Lee Hill, June 2nd, 2025

Why Companies Are Leaving Public Cloud Behind

Cloud computing has dominated IT strategy for the past decade. Originally, businesses turned to public cloud providers for flexibility, scalability and rapid deployment. However, more enterprises are shifting workloads back to on-premises infrastructure and colocation data centres like IP House London.

This growing movement, also known as cloud repatriation, is being driven by hidden costs, security concerns, performance challenges, and the rising energy demands of AI. 

According to VMware’s Private Cloud Outlook 2025, 69 per cent of organisations are considering moving some workloads into private cloud or hybrid environments from the public cloud. This is a significant shift in strategy, especially for companies looking to regain control and reduce their operational risks.

Understanding Cloud Repatriation and Hybrid Infrastructure

Cloud repatriation simply means migrating data, workloads or applications from public cloud platforms such as AWS, Azure or Google Cloud back to physical infrastructure. This infrastructure might be on-premises or hosted within a secure, third-party colocation facility like IP House. 

However, it isn’t a wholesale rejection of cloud technology. Many businesses are now adopting hybrid cloud strategies, where critical or sensitive workloads are repatriated for greater control. Meanwhile, other functions remain in the public cloud to benefit from its elasticity. The end goal is to create a bespoke, cost-effective infrastructure that meets both performance and governance needs.

Why Tech Leaders Recommend Colocation Over Cloud

Between 2023 and 2025, multiple experts in the sector highlighted the same key reasons for the return to colocation. These include rising energy needs, the cost of AI deployment, vendor lock-in, compliance requirements and connectivity issues.

The Uptime Institute's 2024 Global Data Center Surveyconfirmed this shift, stating:

“Many of the cloud and hosting workloads are also ultimately housed in colocation facilities. Uptime Intelligence’s report on the growth of hyperscale colocation campuses backs up the observation that more IT and workloads are being placed in colocation facilities.”

The above quotation shows the growing reliance on purpose-built colocation centres, not just by smaller businesses, but by cloud providers themselves. The rise of hyperscale campuses means colocation is now considered an integral part of modern infrastructure design. This even applies to companies with complex or global IT needs.

Six Key Reasons Workloads Are Repatriated

1. Cutting Cloud Costs with Predictable Pricing

Public cloud billing is complex. With pricing models based on usage, bandwidth and storage, many companies are surprised by how quickly costs scale. Fixed workloads that do not change in size or frequency often end up being far more expensive than expected.

Colocation providers like IP House London offer an alternative and more predictable monthly pricing. This means that finance departments can do better cost forecasting and achieve long-term savings. 

Software company 37signals publicly documented its move away from AWS in 2022. It is estimated that it will save over $7 million across five years by owning its infrastructure. This case study highlights the long-term financial benefits of bringing workloads back under physical control.

2. Boosting Performance and Reducing Latency

Not all workloads perform well in the cloud. Applications that require low latency, like AI inference models, real-time financial platforms or interactive software tools, suffer from delays with remote hosting. In contrast, Colocation allows infrastructure to be physically located near end-users and major exchanges. IP House London is based in the Docklands, one of Europe’s most connected digital hubs. With direct fibre access to Tier 1 carriers and major IXPs, businesses can reduce latency and improve performance consistency.

3. Meeting Compliance and Sovereignty Needs

Regulated industries like finance, healthcare, defence and education must comply with strict data protection laws. While cloud platforms offer some tools for compliance, many companies still struggle with visibility and auditing.

With Colocation, it is easier to manage physical and logical security. Organisations have full control over data storage, backup, encryption and access policies. At IP House London, this includes features like biometric access, 24/7 surveillance, and ISO 27001-compliant systems. These are all tailored to meet the highest regulatory standards.

4. Powering AI with Energy-Efficient Facilities

AI and machine learning are driving exponential demand for power and cooling. Public cloud providers may not always be equipped to handle high-density AI workloads efficiently or economically. David King, Senior Principal Product Engineer at Cadence, warns that this could soon become a crisis:

“Facilities will start to realise that there really isn’t enough energy. While newly built, AI-optimised facilities can be better suited to handle these requirements, retrofitting older data centres to support increased power and cooling is required to meet demands. However, it is costly and complex.”

King’s statement reflects an industry-wide challenge. Legacy data centres are not keeping up with the needs of modern AI infrastructure. 

Colocation providers are stepping in with purpose-built facilities designed from the ground up. Centres like IP House London can accommodate high-performance workloads with sustainable energy and cooling solutions.

5. Demand for Hyperscale and Interconnected Colocation

Enterprises are turning toward hyperscale-ready colocation for scale, resilience and global reach. According to the aforementioned Uptime Institute 2024 Report, “Operators are repatriating workloads back on-premises or to colocation, moving away from purely public cloud strategies.”

Colocation gives companies the infrastructure control they want. At the same time, colocation facilities maintain fast, secure connections to public clouds and private partners through carrier-neutral facilities.  IP House London provides direct cross-connects, making hybrid cloud adoption seamless.

6. Lack of In-House IT Resources

While some organisations have the skills and budget to build their own data centres, most do not. Managing power, cooling, physical security, and network redundancy requires considerable investment and operational know-how.

As noted by TierPoint, “The scale and complexity of repatriation mean that many organisations are seeking alternatives like colocation rather than trying to build from scratch.”

IP House London helps companies transition out of the cloud without the high costs of building and owning their physical infrastructure. It also provides support, redundancy, and scalability without compromise.

Colocation in London’s Digital and Financial Hub

With the Great Repatriation in full swing, IP House London offers everything modern businesses need from a cutting-edge colocation partner:

• Tier 3 data centre design with high-spec redundancy
  
• Power configurations suited to high-density and AI infrastructure
  
• Carrier-neutral environment with direct access to cloud providers and exchanges
  
• 24/7 monitoring, physical security and technical support
  
• For organisations that need to scale securely, predictably and intelligently, IP House provides a powerful alternative to depending solely on the public cloud.

Pricing Simplicity:

IP House tailored, and flexible pricing capability supports all businesses, from small-scale startups to established multinational organisations.  Unlike Cloud Price contract modelling, which can be complex due to periodic reviews or growth/usage costs being calculated at intervals, IP House Colocation contracts are deliberately simple and easy. Clear pricing is maintained throughout the agreed term, and even at renewal, pricing is often maintained close to the original contract.

Service Capability:

Every client receives a dedicated team to support them from the first stage of onboarding, commercial/contract management, through to technical support and engineering/development requirements where required.  All clients receive the same quality of engagement throughout their time with IP House and this supports the organic growth which IP House maintains till this day.

AI-Driven Infrastructure Needs Are Surging

A 2024 report fromMcKinsey clearly highlights the rising infrastructure demands of AI:

“Demand for AI-ready data centre capacity will rise at an average rate of 33 percent a year between 2023 and 2030. Around 70 percent of total demand for data centre capacity will be for data centres equipped to host advanced-AI workloads by 2030.”

This scale of growth is unprecedented. To meet these demands, data centres need to be built for purpose. Legacy cloud environments will struggle to keep up. 

Colocation providers like IP House London are already preparing for this future as part of the Great Repatriation. 

Is Colocation Right for Your Business?

You should seriously consider colocation if your company:

• Runs workloads that are stable, predictable or growing in scale
  
• Is experiencing high or fluctuating costs from cloud use
  
• Requires greater control over infrastructure, performance or security
  
• Must comply with UK, EU or industry-specific regulations
  
• Is building a hybrid or multi-cloud strategy for long-term flexibility

Rebalancing the Cloud with Smart Colocation

Without doubt, the public cloud still plays a vital role. But for many organisations, it’s no longer the complete solution any more.

Colocation with IP House London allows you to reduce costs, improve control, and support next-generation workloads like AI and edge computing. It also keeps you connected to public cloud services, enabling the flexibility of hybrid solutions without compromising compliance or performance.

IP House London stands at the centre of the Great Repatriation. With leading-edge infrastructure, a carrier-rich environment, and full-service support, we are helping companies transition from cloud-first to cloud-smart strategies.

JOIN THE GREAT REPATRIATION. FILL OUT THE CONTACT FORM TODAY!

FAQS: Frequently Asked Questions

What is cloud repatriation in simple terms?  Cloud repatriation is when a company moves its applications or data from a public cloud provider back to physical infrastructure, either on-premises or in a colocation data centre.

Why are companies moving away from the public cloud?  Many businesses are repatriating cloud workloads due to high long-term costs, performance issues, regulatory compliance, and the rising energy needs of AI and data-heavy applications.

Is colocation cheaper than the public cloud?  Yes, for consistent workloads, colocation often provides better value by offering predictable, fixed pricing. Public cloud costs can spike unexpectedly based on bandwidth, storage, or compute usage.

Can you combine cloud and colocation?  Absolutely. Many organisations use a hybrid approach, keeping some services in the cloud while placing mission-critical or sensitive workloads in colocation facilities for more control.