What Every Business Needs to Know About Data Localisation Laws

Data localisation is one of those terms that’s been cropping up more and more in boardrooms and compliance meetings. In simple terms, it’s about where data is allowed to live. Governments are laying down rules that say: this type of data must stay inside the country, or at the very least, a copy of it has to be stored locally.

For businesses, this isn’t just legal jargon. It directly affects how companies handle personal information, financial records, health data, and even day-to-day operations. And the number of countries enforcing it is climbing fast.

What Data Localisation Really Means

In practice, these laws usually mean one of three things:

• Certain types of data must stay on servers inside the country
• Restrictions on moving data overseas
• A requirement to keep a local copy, even if backups exist elsewhere

Why governments push this? Depends who you ask. Some argue it’s national security. Others say it’s about protecting citizens. And a fair few see it as a way to grow their own tech industries. The common thread: control.

Why It’s Growing Fast

There’s not a single reason driving it—it’s a mix:

• People want tighter privacy protections
• Regulators want to keep sensitive information out of foreign hands
• Local cloud providers benefit when companies are forced to store data nearby
• Advocacy groups keep pressing lawmakers for tougher measures

And the numbers show just how quickly things are shifting:

• In 2017, 35 countries had localisation rules. By 2021, that was 62 countries with 144 restrictions (Help Net Security).
• By early 2023, around 40 countries had about 100 measures in place, two-thirds combining storage and transfer limits (OECD).
• McKinsey reckons about 75% of countries now have some form of localisation law.

This is no longer fringe—it’s mainstream.

The Risks for Businesses

Yes, there are upsides—consumer trust, clear compliance guidelines, stronger oversight. But the flip side? Costs stack up quickly.

The real-world challenges look like this:

• Leasing or building local data centres
• Tougher compliance checks and audits
• Fragmented systems across different countries
• Slower innovation, especially in AI, R&D, and global cloud setups

How It Plays Out in Australia

Australia doesn’t have blanket localisation laws for every type of data. But there are targeted rules. For example:

• Health and government-related information often must be stored locally or under strict contractual controls.
• The Privacy Act sets out tough protections, and ongoing reforms may increase restrictions further.
• The Consumer Data Right (CDR) gives people more control over their data, focusing on portability and access rather than strict localisation.

For Australian companies working internationally, the landscape gets more complex. Businesses dealing with the EU, China, or India must comply with foreign laws that may require strict storage or transfer restrictions.

Compliance Priorities for Businesses

Getting localisation wrong can cause legal headaches, reputational damage, and lost markets. Here are some practical steps companies are taking:

• Map where users are and where servers sit
• Classify what data is sensitive, regulated, or personal
• Check cloud providers like AWS, Azure, Google Cloud for compliant regional options
• Use legal tools like standard clauses or binding corporate rules
• Budget for higher infrastructure and compliance costs
• Watch reforms closely—India’s data bill is a good example of how fast things move

When Localisation Helps vs. Hurts

Not every piece of data needs to be stored locally. Businesses should weigh the benefits against the costs.

Where it makes sense:

• Handling highly sensitive data (health, banking, government work).
• Building consumer trust in markets where local storage is expected.
• Working under public sector contracts.

Where it may be harmful:

• Storing routine, non-sensitive data that’s safe under international safeguards.
• For startups or digital-first businesses where duplication adds unnecessary overhead.
• When fragmentation slows down innovation or creates barriers to global markets.

Strategic Moves for Businesses

The best way forward isn’t to resist localisation—it’s to prepare for it. Companies are finding success by:

• Running risk audits to spot weak points
• Building flexible cloud systems that adapt to multi-region requirements
• Negotiating contracts with room to shift infrastructure
• Using localisation as a trust-builder with customers
• Bringing in compliance specialists before problems land on their desk

Conclusion

Data localisation laws are not going away. They’re changing how businesses handle storage, transfers, and security. The companies that plan for it—budgeting smartly, staying flexible, keeping an eye on legal shifts—are the ones that will stay ahead.