What You Need to Know About the Growth of Data Centers in Costa Rica

Costa Rica is one interesting growing data center market in Latin America. Main attributes are legal security, political stability, and a fully green energy matrix.
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The Costa Rica data center industry has grown due to the explosion of data demand in sectors, including cloud computing services, artificial intelligence, and big data analytics. 

The COVID-19 pandemic accelerated the demand for digital services and increased adoption of cloud-based collaboration tools, platforms, and other online services. Cloud providers are seeing a surge in demand for remote collaborators and digital networking

Data centers are essential for the smooth operation of a company’s technology and are responsible for storing important data and keeping it safe, whether for clients, partners, or the operation itself. 

Due to divergent and rigid compliance regulations, as well as traditional tech hubs reaching their capacity limits, corporations and data center providers are looking to expand into different destinations, such as Latin America, Europe, and Asia-Pacific. 

The data center industry in Latin America 

Latin America is among the most significantly growing data center markets. Some causes are the implementation of 5G networks, private and public investments, as well as the introduction of new undersea cables connecting various locations to Latin American countries. 

According to Arizton‘s latest research report, the global Latin America data center construction market is growing at a CAGR of 9.25% during 2023-2029 and is expected to be valued at USD 2.32 billion by the end of the decade. 

Brazil is a leading data center investment hub, with São Paulo serving as a central spot for many facilities. Other key countries for the sector include Chile, Colombia, and Mexico. 

Microsoft is developing a new data center/cloud in Chile. The company plans to expand the use of AI in this and other centers in the region.

In Central America, the data localization laws are a significant factor driving the data center construction market, as countries in the region are implementing data localization-related regulations to store data and other confidential information. 

Some countries, such as Costa Rica and Panama, account for the growing presence of data center facilities that received the Tier II and Tier III standard certification and spend their revenue on infrastructure improvements, to attract international investment. 

We can expect this trend to expand even further in the region as countries continue to make investments in this area to attract global business.

The Costa Rica data center industry: a promising hubspot 

Costa Rica’s main attributes for the data center industry include legal security, political stability, and a fully green energy matrix, in addition to its local tech nearshoring and manufacturing park. 

A picture of the Costa Rican flag to exemplify how the Costa Rica data center market is expanding
The Costa Rica data center market is expanding

A range of different companies, including large cloud providers and enterprise colocation companies, are considering installing data structures through third-party providers or expanding their existing structures in the country. 

Expanding into markets such as Costa Rica also fits with the industry’s need to find less-crowded data center hubs but still matching the growing demand for power availability. 

The country offers a privileged location for companies to be close to competitors, while also seizing geographical opportunities that are not fully explored, with available land for expansion. As of April 2024, Costa Rica has seven data centers, six of which are located in the capital San José, according to the Data Center Map.  

More projects from hyperscalers and enterprise companies are to be expected, as Costa Rica has strong terrestrial connectivity with neighboring Nicaragua and Panama, along with available people, and energy surplus. 

Workforce aspects and nearshoring in Costa Rica 

For many years, Costa Rica has promoted strategies to attract global investment and position itself as an ideal destination for companies overseas. With efforts from both public and private sectors, the country has managed to consolidate as one of the preferred destinations for leading multinationals. 

Also, in business process outsourcing (BPO), countries closer to the US may find an advantage. Smaller neighbors close by, such as Costa Rica, stand among preferred nearshoring destinations.  

So, not only is the country one popular tourist destination leading investment from the likes of hotel, restaurant, and manufacturing companies, but it also attracts tech giants such as Microsoft, Intel, and so on. 

This has stimulated significant talent development as well. In its education overview, Costa Rica is already known to rank among the top 3 Latin American countries for student performance, being the leading nation in Central America. 

Furthermore, Costa Rica’s commitment to developing talent with STEM skills (Science, Technology, Engineering, and Mathematics) makes it an attractive destination for investors in advanced manufacturing, life sciences, and digital technologies, including data centers. 

Options for hiring and building Costa Rica data centers

You can choose between different options for hiring top talent in Costa Rica, depending on your operations’ needs, the expected scalability, and your previous experience in the region. 

One common approach taken by large-scale global companies has been to set up their own local entities in strategic spots, which is a legal demand for international investors. 

However, this can impose serious regulatory issues, especially when a company doesn’t have robust HR department with global experience. To overcome this barrier, some data center giants choose to acquire local smaller companies, merging their already established clients, resources, and personnel. 

Alternatively, you can take action in the boom of the Costa Rica data center industry and still guarantee legal compliance via international PEO services. A provider of PEO services handles many employee administration processes such as hiring, and managing employee payroll on behalf of international clients. 

This type of solution is likely to warm up the sector exponentially. Because it presents a streamlined, cost-effective, and time-saving option for any company who wants to seize opportunities in Costa Rica. Even more interestingly, most stages of selection and onboarding can be done fully remotely. 

If you want to set up solid operations in Costa Rica and keep management in-house, you can still collaborate with PEO providers, such as an employer of record, or an international recruitment agency, for standalone recruiting services.

There are plenty of opportunities for you to take advantage of the current heat in the Costa Rica data center market and access globalization ina way that is safe, compliant, and cost-effective. 

 

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