Google Data Center in Malaysia; why not the Philippines?

Drew points us to a brewing discussion at Slashdot over a possible new Asian Data Center being planned by Google. Rumor is that it’s going to be Malaysia though reports indicate Japan, Taiwan, South Korea, India and Vietnam to be ideal candidates as well. Wait, why isn’t the Philippines even in the picture?

That’s where the discussions over at Slashdot was leaning forward to. And any Asian country that can grab Google’s attention and business will surely get a huge boost in their IT reputation (bragging rights if you will).

Google is pitting foreign governments against one another in a battle for a major new data center in Asia. In the past week, both the prime minister of Malaysia and economic minister of Taiwan have said their countries are leading candidates for the Google project, with Japan, South Korea, India and Vietnam also mentioned as contenders in an 18-nation site selection process. Google typically invests $600 million in each new data center. Tech companies often use multi-site searches as a tool to coax incentives out of local governments, which sweeten their offers to outbid rivals from other regions. Google’s Asian initiative appears to be taking this strategy to a new level, coaxing heads of state to invest political capital in their lust for one of Google’s mega-datacenters.

So why isn’t the Philippines even in the picture? A lot of foreign IT companies have a large segment of operations stationed here – Dell, HP, Trend Micro, Hitachi, IBM, etc. What’s another one more?

Well, anybody who’s familiar with running data centers will know that it’s not like any other offshore IT operation. Here are some of the factors I think Google would have considered in picking its ideal location for a data center:

Infrastructure. We’re still way behind in this arena compared to other neighboring countries. Our outgoing international fiber connections are still sparse — and our lines are even hooked up to other Asian countries like HK, Taiwan, Singapore (and there’s another one in Australia I think).
Government Incentives. Another aspect most foreign companies look into when doing business here — incentives in the form of tax holidays and the ones being offered in economic zones are a plus.
Labor. Not just the engineers. Google can well afford to fly and re-locate its best engineers to anywhere in the world. They also take into account the regular employees that will form majority of the manpower. Labor laws might also be a factor. Know why tons of companies go and open up shop in Singapore than any other country in south east Asia? Because Singapore is pro-employer rather than pro-employee.
Privacy Laws. Google is very sensitive about this. With the exception of China, of course. ‘Nuf said.
Economic Stability. Though I don’t think that in this globalized economy, this factor is as strong as it used to be.
Social Stability. Terrorism, rebellion, bomb attacks and the apparent incapacity of the government to curb this doesn’t hep our foreign image. It’s not what’s really happening on the ground, but how others interpret what’s going on. Being on CNN in the last couple of years with the headline mutiny, rebellion or inciting to sedition does not help either.
Power. I mean electricity. Running a Data Center requires enormous amounts of power. And if you look at your recent electric bill, you’ll realize you’re paying twice the amount you’ve actually consumed. In the long run, Data Centers will spend more for power than on any other operating expenses.

It would be cool to have a Google data Center in the Philippines. While dozens of international IT call centers are putting up their own buildings (PeopleSupport, Convergys, etc.) here, putting up a data center is another more complicated matter.

Abe Olandres

Abe is the founder and Editor-in-Chief of YugaTech with over 20 years of experience in the technology industry. He is one of the pioneers of blogging in the country and considered by many as the Father of Tech Blogging in the Philippines. He is also a technology consultant, a tech columnist with several national publications, resource speaker and mentor/advisor to several start-up companies.

https://www.yugatech.com

32 Comments

assistencia eletrolux says:

15 years ago

good article, i will add my feeds.
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leerah says:

15 years ago

how come brazil has a data center? could you please explain why?
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Vadim Berman says:

16 years ago

* Brownouts
* Only La Salle has a dedicated course on natural language processing, which is what Google is about
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Berlin says:

17 years ago

You really think Goog and MS are worried about cost of labor?

“Google recently confirmed that it has purchased 520 acres in Goose Creek on the South Carolina coast for a $750 million data center project.”

Goog and MS are building their new DC’s next to hydroelectric damns. They require so much space and power and we can’t provide that. Land in the midwest is still cheap, btw.

http://www.datacenterknowledge.com/archives/2007/Jan/20/google_planning_two_huge_sc_facilities.html
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Abe Olandres says:

17 years ago

If the recent exodus of big-name companies from the Philippines is any indication, I think these all boils down to net cost of operation. The biggest benefit of putting up a business unit in the country is lower cot of labor and stuff. Now that China and other neighboring countries such as Vietnam are as competitive, everybody’s moving there.
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Miguel says:

17 years ago

Jerome,
Not a direct comparison. A datacenter is not a fab. A fab needs an order of magnitude more cleanliness than a data center. You don’t need to wear protective clothing to work in a DC.
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Jerome says:

17 years ago

There’s a reason why Intel didn’t put the whole wafer fab in the Philippines and instead opted for packaging and moved everything to Malaysia (Penang for that matter).

Dust. We couldn’t achieve a solid clean room environment. What more could a high capacity datacenter.
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JP Loh says:

17 years ago

+1 for infrastructure issues too.

Also, it’s too risky here. Too much natural disasters and the economy is not that stable yet.

My bet for the best candidate is Japan with Taiwan as the second choice.

“A lot of foreign IT companies have a large segment of operations stationed here” — not to mention that most of these segments are not IT-related.

I think we still have a shortage of qualified IT professionals here. What more with R&D?
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J says:

17 years ago

I’d go with Infrastructure issue. Yes, as posted above, ours is quite weak compared to others. (read: expensive)
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vance says:

17 years ago

well I’m not surprised… even if we are included in the list; will still be the last choice.
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Rico says:

17 years ago

Haha! I should’ve sent a buck. Oh well I guess you could buy a bottle of pop cola instead with that amount.

Maybe this should be a trend in the blogging world, if you liked an article, send the author a buck. Just like tipping in restos.
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Abe Olandres says:

17 years ago

@ Rico – thanks for the beer! But Paypal took most of it away:

Total Amount: $0.50 USD
Fee Amount: -$0.32 USD
Net Amount: $0.18 USD

*haha*
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Eugene says:

17 years ago

Sigh. Despite the fact that Singapore’s government is a bit repressive like China’s (they also rank quite low in press freedom), it’s an undeniable fact that Singapore is powerhouse investment site for IT and other high-tech industries like biotechnology. Fortunately, the Philippines can hold its own because primarily of our English capability and affinity with Western culture. That and that Filipinos are perceptively more creative than our neighbors. Yet, it all depends on how our government and the industry can market our country.
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Miguel says:

17 years ago

Singapore is still more attractive for an R&D center – for the people there, and the people they can hire from the region (including Pinoys!)

But, the engineering center director position is still open!
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Andre says:

17 years ago

Huseyn needs to switch to Western Union Quick Cash
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Andre says:

17 years ago

Because people keep trying to take over the government by taking over hotels. Who wants to store data in a unstable country.
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Rico says:

17 years ago

BTW Yuga, I just bought you a beer. I think 50 cents (USD) would be enough to buy you a bottle of san mig light :)
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Rico says:

17 years ago

I agree with Eugene above.

Yuga, I think R&D’s (hardware) infrastructure is simpler compared to the requirements of a DC. We can definitely host an R&D center here infra-wise, what we need though is a sustainable pool of talent. But with the ever growing trend of homegrown talent leaving our shorelines for more lucrative opportunities abroad, our chances of attracting R&D is getting slimmer and slimmer.
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Erwin says:

17 years ago

A Google DC would be nice… But I have to agree with Migs & Derek; you would need competitively priced and Telco independent DCs & carriers, peering (interconnection) arrangements between local ISPs and a redundant local and international network in place before the big guys would even consider the Philippines.

The big question is; will anyone change the current situation? The telco’s (PLDT, etc.) seem to be making easy money right now so they are definitely not going to turn things around any day soon…
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Miguel says:

17 years ago

The engineering center doesn’t need much in terms of facilities. Here in Haifa they just rent from a technopark, and they don’t even have a dedicated building. We can host Google Engineering anywhere in our “Grade A” office spaces.

But, the engineers… that is the question!
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BrianB says:

17 years ago

If companies begi putting up R&D here two things will happen: we will become the corporate espionage capital of the world, number 1. Number, we’ll learn the value of good ideas and innovation.
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Abe Olandres says:

17 years ago

That’s the problem. If the Philippines cannot attract a spot for a DC, how much more for R&D?
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Eugene says:

17 years ago

Why should we care that we are not considered for a data center? For one thing, data centers do not generate a lot of jobs, unlike outsourcing, offshoring, and call centers. At the very least, data centers only need procurement officers, system administrators, and network security analysts.

Give the data center to Malaysia (whose territory is not too much criss-crossed by fault lines, by the way, unlike the Philippines) and lets instead have a Google engineering and R&D center here (like the one in China)! That’s a better vote of confidence for our IT industry than a mere data center.
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Mindanao Bob says:

17 years ago

Strong peso makes it expensive to do business in the Philippines now. Also labor costs are high in the Philippines compared to Malaysia.
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Blogoloco says:

17 years ago

Time to focus on those weaknesses then.
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Derek says:

17 years ago

Infrastructure is the main concern here. Our link to the world isn’t that reliable.
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L.A says:

17 years ago

Google Data Center in PH = More Jobs!
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Miguel says:

17 years ago

Now as for talent… I am working in Israel right now. I’ve been in and out of here for the past year. I’m doing work for a major US company which has an R&D center in Israel.

A short walk away, are the Israel offices of Google and Microsoft, as well as hardware companies like Intel (the biggest presence in the technopark here).

But none of these companies, as far as I know, have data centers here. Just engineering centers. Bandwidth to Israel is abundant but only has a few cable routes – just like the Philippines.

This is what we can do in the Philippines!
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Miguel says:

17 years ago

We can’t even properly host Pinoy content in the Philippines – how will we host others’?

To react to Huseyn’s post – what we need is a bona fide Google office in the Philippines to help with payments, and not a data center. C’mon Google, upgrade Aileen to Country Manager.
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Huseyn says:

17 years ago

I would be glad if Google will have data center here in the Philippines. If that happen maybe our checks from google adsense will be faster delivery and more easy technical support.
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McBilly says:

17 years ago

Great find Abe! It would really be cool if that Data Center would reside here. Just think of all the jobs it could create! The government should start getting their incentives straight! :evil:
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