As global technology giants announce hundreds of billions of dollars in new data center investments, the world is witnessing a profound misunderstanding of what appears to be a ‘compute shortage’.
DATA CENTRES
As global technology giants announce hundreds of billions of dollars in new data center investments, the world is witnessing a profound misunderstanding of what appears to be a ‘compute shortage’.
The dominant response -- building ever-larger, capital-intensive data centres -- resembles adding more lanes to a chronically congested highway. It may offer temporary relief, but it does little to solve the underlying structural inefficiencies of today’s digital infrastructure. And as Pakistan positions itself within the global digital economy, understanding these dynamics is critical.
The scale of global expansion is staggering. Data centre capital expenditure surged 53 per cent year over year to $134 billion in the first quarter of 2025. Meta is reportedly evaluating $200 billion in new data centre investments, Microsoft has committed $80 billion for 2025, and the Open AI Soft Bank Oracle consortium has announced the $500 billion Star gate initiative. McKinsey projects that the world will require $6.7 trillion in data centre investment by 2030.
And, yet the uncomfortable truth remains: most of this infrastructure will be dramatically underutilised. Globally, average server utilisation ranges from just 12 to 18 per cent. An estimated 10 million servers sit entirely idle, representing roughly $30 billion in wasted capital. Even ‘active’ servers rarely exceed 50 per cent utilisation, meaning the vast majority of today’s compute infrastructure continuously consumes electricity without delivering proportional economic or computational value. Much like highway induced demand, where new lanes reduce congestion only until they attract more vehicles, the expansion of centralized data centers generates more capacity without fixing the structural inefficiencies of how compute is sourced, orchestrated, and consumed.
This problem has now become an environmental liability. Data centre energy consumption is projected to triple by 2030, reaching nearly 3,000TWh annually. Goldman Sachs estimates that global data centre power demand will grow 160 per cent by the end of the decade. Some hyper scalers have begun purchasing entire power plants to meet their energy needs, while major urban centers increasingly deny grid connections to new facilities due to capacity constraints.
This trend is a tacit admission that the current model centralised, monolithic, energy-dense infrastructure is fundamentally unsustainable. Against this backdrop, the real solution is not to build more compute infrastructure but to orchestrate existing resources more intelligently. Modern distributed compute platforms can aggregate idle capacity from data centers, enterprise servers, telecom edge nodes and even consumer devices into unified, on-demand compute pools. This distributed architecture offers immediate availability, substantial reductions in capital expenditure, improved environmental performance and inherently higher resilience.
The technology stacks to enable this shift already exists. Docker containers, virtualisation layers, multi-cloud orchestration engines and advanced workload schedulers can abstract the complexity of distributing tasks across geographically diverse resources. The missing component is not technical capability but a willingness among industry leaders to shift from an ownership-centric mentality to a utility-based model of compute consumption.
If Pakistan can guarantee reliable electricity, enhance cybersecurity, strengthen its workforce and embrace modern distributed compute models, it can transition from a market with potential to a strategic contributor in the global data economy
For Pakistan, this global transition presents a strategic inflection point. While the country may not be viewed globally as a traditional data center hub, the dynamics are shifting. Pakistan has a population of over 240 million, 116 million internet users, 190 million mobile connections, and more than 34 million active gamers. It ranks among the top five global markets in AI adoption sentiment. These indicators reflect a rapidly expanding digital footprint, making Pakistan an increasingly relevant node in the global computer network.
International hyper scalers are grappling with unprecedented bottlenecks, most notably three-to-ten-year delays for grid interconnection in mature markets. Many have adopted ‘Bring Your Own Power’ strategies, while others are actively seeking secondary hubs to host workloads closer to end users at lower cost and with better latency.
Pakistan’s abundant installed capacity, surplus generation in off-peak seasons, and government-allotted 2,000MW for AI and bitcoin-related data centre expansion position the country as a potential beneficiary of this global rebalancing. Pakistan does not need to compete head on with established hyper scale markets; it just needs to complement them. By becoming a secondary or regional hub, the country can handle latency sensitive workloads for South Asia, Central Asia and the Middle East. Upcoming submarine cable additions enhance this value proposition by strengthening global connectivity and reducing latency.
But infrastructure attractiveness is not determined by geography alone; it hinges on reliability, security and institutional trust. Pakistan’s power sector, historically marked by outages, fuel shortages and hydropower variability, remains a concern for investors. While the government is pursuing grid modernisation and exploring the revival of captive power plants, investors will expect demonstrable, consistent progress.
Similarly, cybersecurity remains a critical gap. The 2021 breach of the Federal Board of Revenue’s data centre illustrated systemic vulnerabilities. Ranking 50th on the ITU Global Cybersecurity Index, Pakistan must elevate its security posture to meet global standards, because trust is as crucial as cost competitiveness.
Human capital presents another challenge. Despite having one of the world’s youngest populations, Pakistan faces shortages of skilled professionals in cloud engineering, cybersecurity and data centre operations. According to the World Economic Forum, more than half of Pakistani businesses struggle to find the talent they require. Accelerating vocational pathways, investing in digital skills and forging industry-academic partnerships will be essential.
Yet Pakistan retains a compelling competitive advantage in cost. Construction costs are lower than in Southeast Asia or the Gulf, while electricity prices, at approximately $0.12 per kWh, remain regionally competitive. Special Technology Zones, renewable energy incentives and tax exemptions further strengthen the investment case. Investors, however, require regulatory predictability long-term policy consistency is non-negotiable.
Globally, countries like Malaysia, Vietnam, Indonesia and Bangladesh have already attracted billions in data centre commitments. Pakistan has a narrow window to position itself as a meaningful node in the global digital ecosystem. If the country can guarantee reliable electricity, enhance cybersecurity, strengthen its workforce and embrace modern distributed compute models, it can transition from a market with potential to a strategic contributor in the global data economy.
Pakistan now faces a pivotal choice, remain on the periphery of the world’s compute revolution, or seize this inflection point by building smarter, more sustainable and more interconnected digital infrastructure. The convergence of global inefficiencies and local opportunity will not last indefinitely.
The writer is a qualified chartered accountant who works on climate finance, carbon markets and sustainable development across disaster risk reduction and climate change.
