Why Are More Companies Repatriating Workloads from the Cloud?

Over the past decade, many businesses of all sizes have embraced the cloud for its scalability and promise of cost savings. The cloud has been credited for helping companies innovate faster, expand globally, and offload infrastructure management to providers like AWS, Microsoft Azure, and Google Cloud.

However, as cloud adoption matures, a noticeable shift is occurring. More organizations are re-evaluating their cloud investments and repatriating certain workloads back to on-premises data centers or hybrid environments.

According to Barclays CIO Survey 2024, organizations planning to move workloads from public cloud to on-premises reached an all-time high of 83%, up from 60% just two years ago.

In this blog post, we will explore the key drivers behind this cloud repatriation trend. From rising operational costs to security and data governance concerns, we will break down why more companies are reconsidering where their workloads reside.

The Cost Factor

According to Uptime Institute, cost is the number one concern for data center professionals today.

While the cloud often appears cost-effective at first, many organizations experience sticker shock as their operations scale. Cloud costs can accumulate rapidly, and data egress fees—charges for moving data out of the cloud—can add up unexpectedly. Additionally, unpredictable costs associated with fluctuating workloads can strain IT budgets and lead to cloud bills that far exceed initial projections.

When comparing the total cost of ownership, businesses are increasingly finding that on-premises infrastructure may offer better long-term value. Although cloud solutions reduce upfront capital expenditures, on-prem environments allow for greater cost predictability. Over time, the cumulative costs of using cloud providers can surpass the expense of maintaining on-prem infrastructure. By repatriating certain workloads, organizations regain control, often lowering operational expenses.

Without rigorous cloud management strategies, it is easy for cloud sprawl to occur, where underused resources and unnecessary services drive up expenses. By moving select workloads back on-prem, businesses can optimize performance, consolidate resources, and reduce waste, achieving better overall cost efficiency.

Security and Compliance

Security and compliance have become significant catalysts for companies repatriating workloads from the cloud. As data privacy regulations tighten across industries and regions, the need to ensure data sovereignty has grown. Many organizations must keep sensitive data within specific geographic boundaries or on-premises to comply with local laws and avoid the complexities of cross-border data transfers. This trend is particularly pronounced in sectors like finance, healthcare, and government, where regulatory scrutiny is high, and the consequences of non-compliance are severe.

Security concerns also play a pivotal role. Despite the robust security frameworks offered by major cloud providers, some organizations perceive a lack of control over their data when it resides off-premises. For sensitive workloads, keeping data in-house is seen as a safer option. Repatriating workloads allows businesses to apply customized security protocols, potentially reducing the risk of breaches and enhancing overall data protection.

The landscape of industry regulations is continually evolving, prompting businesses to reconsider their cloud strategies. Laws like the GDPR in Europe, CCPA in California, and industry-specific mandates require stricter governance over how data is stored, processed, and accessed. To meet these requirements, some organizations are choosing to bring workloads back to their own facilities, where they can exercise full oversight and ensure adherence to complex compliance frameworks. This shift highlights the growing intersection between cloud repatriation and the broader need to mitigate legal and regulatory risks.

Performance and Latency

For many organizations, performance and latency are critical factors driving the repatriation of workloads from the cloud. While cloud environments excel at providing scalability and distributed access, latency issues can arise for workloads that require real-time processing such as financial services and industrial automation. These applications often suffer when data must travel significant distances between cloud servers and end users. Even small delays can impact performance, prompting companies to bring these workloads back on-premises for faster, more reliable processing.

Proximity to data sources is another key consideration. As businesses generate vast amounts of data at remote sites, branch offices, or IoT devices, processing this data closer to where it originates minimizes latency and maximizes efficiency. Repatriating workloads allows companies to position compute resources near critical data flows, enhancing responsiveness and reducing the need for constant cloud communication.

The growing adoption of edge computing further underscores this shift. By deploying computing resources at the edge—closer to users and devices—companies can handle data processing locally, reducing the need to send large volumes of information to more centralized cloud data centers. This can help organizations meet their performance demands, resulting in a more strategic workload distribution.

Operational Control and Customization

Operational control and customization are driving forces behind the decision to repatriate workloads from the cloud. As businesses grow and their technology needs become more complex, many find that cloud environments can limit their ability to tailor infrastructure to specific requirements. Greater customization needs—such as unique hardware configurations, specialized software stacks, or non-standard networking setups—often push companies to move workloads back on-premises, where they have full control over system architecture and design.

Vendor lock-in is another significant concern. Relying heavily on a single cloud provider can create dependencies that limit flexibility and negotiating power. If pricing models change or service outages occur, organizations can face disruptions with few alternatives. By repatriating workloads, companies can diversify their IT environments and reduce their reliance on any one vendor, mitigating risks associated with lock-in and ensuring greater autonomy over their technology.

Additionally, infrastructure flexibility is a key advantage of on-premises or hybrid models. Cloud environments, while highly scalable, often operate within the constraints of predefined service offerings and configurations. On-premises solutions, however, allow businesses to deploy any hardware, implement proprietary security measures, and optimize systems for specific performance benchmarks. This level of flexibility empowers organizations to fine-tune their infrastructure to meet the exact demands of their workloads, driving both efficiency and innovation.

Hybrid and Multi-Cloud Strategies

Rather than fully abandoning the cloud, many organizations are adopting hybrid models that blend on-premises infrastructure with cloud solutions. This balanced approach allows companies to leverage the scalability and innovation of the cloud while maintaining control over critical workloads that perform better or more securely on-prem. By distributing workloads across environments, businesses can optimize performance, cost, and security without fully committing to a single model.

A key component of this strategy is carefully evaluating which workloads should remain in the cloud and which are better suited for on-premises environments. Typically, workloads involving sensitive data, high compliance requirements, or low-latency demands are repatriated, while less critical or highly elastic workloads stay in the cloud. This selective approach ensures that companies benefit from cloud agility while maintaining oversight of mission-critical operations.

Hybrid strategies also enhance resilience and flexibility, allowing organizations to shift workloads between environments as needs evolve. By avoiding reliance on a single provider, businesses can minimize downtime, negotiate better terms, and choose the best environment for each workload based on performance, cost, and security considerations. This dynamic, adaptable IT architecture positions companies to navigate the complexities of modern digital transformation while mitigating the risks associated with a pure cloud approach.

Dropbox: A Real-World Example of Cloud Repatriation

Dropbox, a cloud storage and file-sharing service, initially relied heavily on AWS for its storage needs. Dropbox decided to move the majority of its data from AWS to infrastructure in colocation facilities. This strategic shift allowed Dropbox to have greater control over its hardware and optimize costs associated with large-scale data storage. Within 2 years, Dropbox reduced operational expenses by $74.6 million.

Cloud Repatriation and DCIM Software

As companies move workloads back from the cloud to their own data centers, they need greater visibility into their assets, capacity, and energy usage to enable efficient operations. Data Center Infrastructure Management (DCIM) software plays a significant role in cloud repatriation by helping organizations monitor, manage, and optimize their physical data center infrastructure more effectively.

DCIM software provides this by offering real-time insights into space, power, cooling, and data/power port capacity and utilization which helps prevent the same inefficiencies that may have driven increased cloud adoption in the first place.

With DCIM software, organizations can centralize and simplify data center management to better support long-term goals and provide a solid foundation for efficient and reliable data center operations.

Bringing It All Together

Cloud repatriation is gaining momentum as organizations seek greater control, cost efficiency, and enhanced security for their critical workloads.

While the cloud remains beneficial for some workloads, many businesses are finding that a hybrid approach offers the best of both worlds. By carefully evaluating workload placement, companies can optimize performance and mitigate risks. As the IT landscape evolves, balancing cloud and on-premises infrastructure will be key to long-term success.

Want to see how Sunbird’s DCIM software can help you better manage your physical data center infrastructure? Get your free test drive now.