Why European Organisations Need Cloud Infrastructure with Sovereignty

Guest post by Sapthagiri Chapalapalli, Head of TCS Europe

The European Environment

European organisations have a unique opportunity to lead with trusted infrastructure, rigorous compliance, and innovation that advances both growth and societal goals.

The European Union is seen as a regulatory superpower globally, often setting the standards which the world then adopts. In technology, traditionally Europe sets the bar high on risk, safety, rights and antitrust, but there is recognition that there is tension between this approach, versus the more innovation-friendly and hands-off attitude in the US.

Organisations are caught in the middle, needing to be compliant, to work globally, and ultimately ensure their entire digital ecosystem is serving their needs with minimal friction. Maintaining a competitive environment for growth is a constant tightrope to walk.

Right now, the game-changing nature of AI, a fluctuating global legislative environment, and concern over geopolitical risks, data dependencies, and concerns over supply chain vulnerabilities are driving European organisations to reevaluate their technology stacks as a business priority. A sovereign cloud approach is a strong route to advancing business goals while maintaining compliance and being in control of your data.

The sovereign cloud objective

Sovereign cloud is a strong option for European organisations because, by placing the concept of sovereignty at the core of transformation, they integrate data protection and compliance mechanisms from the start to create a framework within which they can competitively innovate, while exercising ultimate control over their data in a protected environment.

At its core, sovereign cloud is a purpose-built cloud computing environment that specifically meets certain protection, security or legal requirements, granting organisations more comprehensive control over their digital assets. Data stays within defined borders or jurisdictions, even when the organisation is working with a global cloud provider, while remaining scalable to the needs of the business.

Sovereign cloud provides strategic autonomy, including protecting intellectual property and personal data to maintain business continuity in the face of geopolitical or supply chain shocks, while preserving speed, elasticity, and interoperability.

And sovereign cloud infrastructure as a service (IaaS) is gaining popularity; spending in this area is forecast to total $80 billion (€68 billion) in 2026, a 35.6% increase from 2025, according to Gartner. As a technology service provider, we’re seeing clients coming TCS with four needs in particular.

1. To reduce exposure to extraterritorial laws. With most mid and large-scale enterprises today storing data in off-premise in the cloud, organisations are often relying on international data centres. And as non-EU laws like the US Cloud Act and China’s Cybersecurity Law become more numerous and powerful, organisations are increasingly looking to keep all of their data in a single controlled sovereign environment.

2. To adhere to strict EU data residency and processing requirements, and react to increasing pressure from regulations like GDPR, DORA, and other sector-specific policy. Organisations want a simple solution to stay compliant.

3. To manage data and supply chain risks in a tricky geopolitical environment by their data. This often means keeping data closer to home in Europe, but not always.

4. To competing on a global scale with new technologies like AI. Organisations want to control and protect the data environment for their AI solutions. Consequently, sovereign clouds are increasingly seen as critical for sovereign AI solutions.

Achieving cohesive design and prioritising a ‘Minimum Viable Enterprise’ approach

When talking with clients, we see sovereign cloud often described as a destination. In practice, it is a set of deliberate design choices working flawlessly in concert with the objective of ensuring meaningful and unambiguous control over data, operations, and compliance under European jurisdiction.

There’s a job for each organisation to do, to assign the appropriate sovereignty level per workload, while maintaining innovation and AI capabilities, plus cost efficiency. And enterprises need to manage the balance between capability and achieving legal compliance, mitigating supply-chain risks, AI and technology sovereignty.

Additionally, it is important that organisations have oversight of their data; the goal is to achieve unified orchestration and control across different varieties of sovereign cloud, like private, national and hyperscale. This requires seamless integration of these diverse design choices to ensure consistent governance and operation.

This is a complex process, particularly when tailoring technology for large-scale organisations. Enterprises are typically looking for locally controlled operating models that apply the appropriate level of sovereignty while bringing multiple cloud designs together under a single, coherent system.

Crucially, not everything needs to be sovereign. The winning approach is pragmatic and risk-based, classifying workloads by criticality and determining the degree of sovereignty each requires. This aligns with a ‘minimum viable enterprise’ approach to sovereignty, focusing resources and controls where they provide the greatest impact and risk mitigation.

Sensitive personal data, national or sectoral critical infrastructure, and proprietary models may warrant higher levels of assurance across residency, operational control, and stack provenance. Less sensitive workloads can benefit from general-purpose cloud services, integrated through consistent controls and observability so sovereign and non-sovereign environments work seamlessly together.

For instance, a multinational financial institution might host its core banking ledgers and customer transaction data in a sovereign cloud to meet strict regulatory compliance and data residency requirements, while its public-facing corporate website system could reside in a general-purpose cloud.

Achieving European sovereignty

Organisations should first work towards minimal viable enterprise level sovereignty. We recommend approaching cloud sovereignty with five complementary principles in mind:

1. Data and computing residency must be demonstrable, with production data, backups, and logs retained in-region and encryption keys firmly controlled locally. This requires operating models that provide locally governed operations, supported by regional personnel and legal entities, to ensure compliance, transparency, and trust. Full operational control must sit in region, with auditable processes and clear lines of authority.

2. Hardware sourcing needs transparency and assurance for dependencies across the supply chain, with options to prioritise regional sourcing where risk profiles demand it.

3. Software choices for sensitive tiers should favour regional or opensource components with verifiable build pipelines and tamper-resistant delivery, thereby mitigating software supply chain risks.

4. End-to-end ownership and decision rights must be defined so organisations retain ultimate control, and governance holds during a crisis.

Europe’s digital future will be sovereign, secure, and competitive if principle is converted into performance. Organisations should embrace working with trusted expert partners where needed to achieve this transformation smoothly and successfully. By moving decisively and collaboratively from pilots to platforms, European enterprises will convert trust into speed, compliance into confidence, and ambition into advantage.

About Sapthagiri Chapalapalli

Sapthagiri “Saptha” Chapalapalli leads TCS Europe, shaping the company’s growth and transformation across Europe. He works closely with global enterprises to create new business models built on the principles of the perpetually adaptive enterprise. With over 30 years of experience across India, Europe, and North America, he brings deep operational and strategic expertise. His work spans cloud, data, cybersecurity, and AI, enabling organisations to become more resilient and future ready. Beyond business, he serves on academic advisory boards, contributing to the development of tomorrow’s leaders.