SMEs in UK & Ireland face rising data hosting & sovereignty fears

Research from team.blue has found that a significant proportion of small and medium-sized enterprises (SMEs) in the UK and Ireland are concerned about the location of their data storage, but many remain unclear about the implications for their businesses.

The study, titled 'The UK & Ireland Data Hosting Report: Data Sovereignty in Focus', surveyed 450 SMEs across both countries and revealed notable differences in the sources and drivers of these concerns. In the UK, 61% of SMEs expressed anxiety over where their data is stored, compared to 45% in Ireland. Despite their shared worries, the research highlighted a divergence in the root causes of these issues, especially in the context of regulatory changes following Brexit and new legislation in both regions.

Post-Brexit divergence

For UK SMEs, sovereignty concerns have intensified in light of the UK's post-Brexit legislative activity, including the Data (Use and Access) Act 2025 and the reclassification of datacentres as critical national infrastructure. These moves place data sovereignty at the heart of the UK's approach to the digital economy.

Irish SMEs, meanwhile, are adjusting to the coming into force of the EU Data Act in September 2025. Similar to previous data protection regulation such as the GDPR, the EU Data Act is influencing not only the practices of Irish firms but is also seen as a potential driver of global standards for data management and sovereignty.

A significant knowledge gap was identified in Ireland, with 68% of Irish SMEs unsure whether their data is even hosted within EU borders. This lack of understanding has the potential to expose businesses to compliance risks and reputational damage.

Issues of trans-Atlantic data storage

The report found that 73% of SMEs across both the UK and Ireland are worried about their data being stored in the United States. This concern reflects ongoing debates about trans-Atlantic data transfers, arising from US legislation such as the Cloud Act and uncertainty over the adequacy of data protection frameworks between the EU, UK, and US.

Pressure to address these issues is coming from inside and outside the organisations. Respondents indicated that most scrutiny arises from company directors-14% in the UK and 16% in Ireland-followed by customers, with 12% in the UK and 14% in Ireland voicing concerns. This development suggests data sovereignty is no longer just a technical matter, but a consideration affecting boardroom decisions, corporate reputation and customer relationships.

"With nearly 6 million SMEs across the UK and Ireland, the fact that a large proportion are operating without clarity on where their data is stored represents a significant challenge - one that touches on compliance, customer trust, and the ability to compete in an increasingly digital economy."

This was the assessment from Kwaku Yeboah-Antwi, Chief AI and Data Officer at team.blue, who highlighted the scale of the challenge for SMEs on both sides of the Irish Sea.

Limited plans for provider switch

Despite the rising awareness of data sovereignty, the report found that decisive action remains limited among SMEs. In the UK, 30% of SMEs are undecided about switching data hosting providers, and 42% have no plans to do so. The figures in Ireland are similar, with 35% undecided and 39% not planning a switch. This trend points to an appetite for further clarity, with many organisations unsure how to proceed.

Kelly Salter, Commercial Director of names.co.uk, commented on the findings: "For UK SMEs, confidence in data sovereignty is becoming a critical business differentiator, shaping not just procurement decisions but also customer trust. The UK's Data (Use and Access) Act 2025 only reinforces this pressure, underscoring the need for clarity and accountability in how data is handled. Education is vital here: without clear understanding of where their data sits, businesses risk falling behind competitors who can offer greater transparency and even exposing themselves to compliance or reputational setbacks. Providers that can combine transparency with guidance and support will stand out as true partners of choice."

Education, transparency and practical guidance

Eamon Kelly, Commercial Director of Hosting Ireland, spoke to the situation facing Irish SMEs, linking regulatory change with the need for greater education and practical support.

He said: "Irish SMEs are navigating the tension between leveraging global providers for efficiency and responding to growing demands for local control and sovereignty. The EU Data Act has only sharpened this debate, setting new expectations for transparency and access - equally as important for SMES. The discussion goes beyond compliance; without better education and awareness, businesses risk making short-term decisions that fail to meet customer expectations, or worse, undermined long-term resilience. Practical guidance, education, and transparency will be essential to empower SMEs to act with confidence in a fast changing digital and regulatory environment."

The report's authors conclude that SMEs in both the UK and Ireland face similar concerns, but there is a clear and ongoing need for practical guidance, improved education, and increased transparency to support business leaders as data sovereignty and regulatory compliance become ever more pivotal issues in the digital economy.