Summary Bullets:

• Digital sovereignty becomes even more critical due to the growing investment in AI while rising uncertainties due to geopolitical tensions.
• Systems integrators and telecom operators should work alongside to develop sovereign AI cloud solutions.

With the pervasive use of technology in all aspects including social services and critical infrastructure, governments see the need to ensure digital sovereignty, which gives the country control over its infrastructure, data, and systems, without influence from foreign entities. This is increasingly an important consideration with the growing geopolitical tensions around the globe and the need to protect against extraterritorial laws that may compromise data sovereignty. Digital sovereignty has been driven in part by data protection regulations. With the rapid development and adoption of AI, it has become even more crucial since since sensitive data may need to be processed for training AI models.

Besides data protection, digital sovereignty needs to take into account operational sovereignty, which means maintaining visibility and control over operations using trusted personnel and entities. Technical sovereignty is another consideration, which ensures the ability to run applications without being overly dependent on foreign suppliers. Open source applications play a crucial role in achieving this objective. The increased emphasis on digital sovereignty has created opportunities for home-grown IT services providers and telecom operators that already have strong relationships with the public sector and major enterprises in the markets they serve. For example, Capgemini and Orange launched Bleu, a company they have jointly created to offer Microsoft-based cloud services that meet standards set by French authorities for data protection and sovereignty requirements. This helps Bleu to target critical infrastructure operators, public institutions, and enterprises in regulated industries across France. It also mitigates against US extraterritorial law (CLOUD Act). Besides France, sovereign cloud solutions have also been introduced by European countries, for example, by T-Systems in Germany and Proximus in Belgium.

The trend is now quickly shifting to sovereign AI solutions. For example, Capgemini has worked with Telenor to develop Norway’s first sovereign AI cloud service in collaboration with Nvidia. Telenor’s AI factory was launched in late 2024 to help enterprises adopt AI, which ensuring security, sustainability (it runs on 100% renewable energy), and data sovereignty within Norway. Atos has also won deals to develop sovereign AI capabilities. Most recently, its Eviden business unit won a EUR50 million contract with Serbia’s Office for IT and eGovernment to deploy a national AI factory, comprising an AI center of excellence and an AI-dedicated supercomputer platform. Eviden is deploying its BullSequana XH3000 supercomputer, which is designed and manufactured in France, which helps to alleviate hardware supply chain concerns. The recent announcement by the EU to set up AI gigafactories will be another catalyst.

This is not just happening in Europe. Sovereign cloud and AI solutions are also being deployed in the Middle East and Asia-Pacific. National AI programs have been driven by government initiatives but often undertaken by domestic telecom operators and other local firms. For example, in Saudi Arabia, the Saudi Data and Artificial Intelligence Authority (SDAIA) has been developing the country’s sovereign AI cloud and building an ecosystem, which includes key players such as stc and Aramco Digital. In Thailand, underpinned by the government’s National AI Strategy (2022-2027), local players such as True, Siam.AI Cloud, and Gulf Edge have also been actively building AI capabilities in the country by working with various global technology partners.

While the local IT service providers and telcos are well-positioned to develop the AI infrastructure, they often do not have extensive AI expertise to help enterprises develop solutions and human capital. Major global systems integrators have been developing their AI practice, which can help their telco customers/partners in various markets bridge the gap. This can also include building the right technology partner ecosystem, strengthening security posture, and developing AI expertise.