Small businesses in the United States could see their electricity bills rise by as much as seventy percent due to surging energy demands from data centers, according to new research co-authored by the Jack Kemp Foundation and Capital Policy Analytics. This increase in energy costs could force smaller firms to scale back operations or even shut down entirely. The average household may pay over a thousand dollars more annually for electricity by 2030 if these energy issues are not addressed. The research indicates that the rapid expansion of artificial intelligence is driving this trend, with nearly forty percent of data centers expected to face power supply constraints by twenty twenty-seven. In Europe, energy demands for data centers are projected to triple by twenty thirty, rising from sixty-two terawatt-hours to over one hundred fifty terawatt-hours.
Kyndryl, the managed infrastructure services company spun out from IBM, has reported a forecasted revenue decline of two to four percent for the fiscal year 2025, potentially resulting in annual revenues between fifteen point two and fifteen point five billion dollars. Despite an anticipated positive revenue growth in the fourth quarter of fiscal year 2025, former employees express skepticism regarding the company’s ability to secure new business, citing layoffs and a lack of new IT service contracts. Concerns have been raised about Kyndryl’s reliance on legacy contracts inherited from IBM, which are often unprofitable. As Kyndryl attempts to pivot towards a consulting-led business model, former employees claim that the company is merely reclassifying existing managed service revenues as consulting work. Currently, Kyndryl’s workforce stands at around eighty thousand, with ongoing efforts to reduce headcount as part of a cost-cutting strategy.
Why do we care?
The explosive growth in AI workloads is creating unprecedented demands on data center power supplies, directly impacting energy prices. Small businesses, which lack the economies of scale enjoyed by large enterprises, may struggle to absorb these increases. IT firms can position themselves as partners to small businesses by offering solutions like energy-efficient IT hardware, cloud migrations to greener data centers, and cost optimization tools.
Kyndryl’s dependence on unprofitable IBM contracts underscores a common challenge for legacy IT service firms: maintaining profitability while transitioning to modern business models. Kyndryl’s dependence on unprofitable IBM contracts underscores a common challenge for legacy IT service firms: maintaining profitability while transitioning business models. It’s a word of warning as you consider changes to your business.
