Regulatory approvals are delaying ‘almost every’ technology project for more than a third of UK IT service providers, according to new research from Telehouse Europe. 

The survey found 34% of providers say approvals now slow down almost every project, while nearly one-in-five report average delays of more than three months. The findings land at an awkward moment for the UK’s ambitions to position itself as a pro-innovation market for AI and digital services – particularly as policymakers continue to emphasise a principles-led approach to regulation.

While many will contest that the UK Government needs to rapidly deregulate, that doesn’t appear to be the response from Telehouse’s survey. In fact, the majority of service providers appear to believe the UK’s existing rules can help, rather than hinder, the rollout of new services. 

Two-thirds (67%) say current data protection rules are accelerating their ability to launch digital services, including 32% who view them as a major accelerator. Telehouse Europe added that a similar proportion of respondents believe the UK’s AI framework supports innovation.

But for many, the day-to-day reality is that navigating approvals is becoming a bottleneck – particularly when requirements vary across borders, or when guidance feels open to interpretation. More than a third (37%) of service providers cited a lack of consistent international rules as one of their biggest operational concerns, underlining the challenge of delivering projects that span multiple jurisdictions.

In practice, that inconsistency can translate into duplicated work, longer sign-off cycles, and greater internal risk aversion – all of which slows delivery even when the underlying compliance intent is supported.

Delivery delays are spilling into workforce decisions

Telehouse Europe’s research also points to a second-order impact: resourcing and cost pressures associated with AI governance.

Over half (51%) of service providers said they have already cut or offshored technology roles – or plan to do so within the next 12 months – due to the cost and complexity of managing AI regulation. While offshoring can reduce costs and broaden access to specialist skills, it can also complicate delivery for UK-based organisations, particularly where compliance, security and governance requirements demand close oversight.

The survey’s results suggest a feedback loop may be forming. Project delays create pressure to reduce costs; cost-cutting can reduce capacity; reduced capacity then risks further slowing delivery – even if organisations remain confident they can meet the rules on paper.

Despite these pressures, confidence in compliance remains high. More than 99% of respondents said they believe they can meet regulatory requirements while continuing to innovate. The gap, Telehouse Europe argues, is less about willingness to comply and more about the friction created by approvals and inconsistent interpretation.

Mark Pestridge, Executive Vice President and General Manager, Telehouse Europe, noted, “Strong regulation and robust approvals are essential to building trust in AI and digital services, and there is clear support across the sector for maintaining high standards.”

“The opportunity now is to improve communication and clarity around approval processes.”, Pestridge added. “Better dialogue between regulators and service providers would help reduce uncertainty, shorten timelines and allow well-governed projects to move forward without unnecessary delay.”

A warning sign for the UK’s digital ambitions

The UK has been keen to pitch itself as a stable environment for innovation, particularly as it seeks to attract investment into data centres, connectivity, and AI-led growth. But if the approvals environment is perceived as slow or unpredictable, it risks becoming a competitive disadvantage, especially for organisations that need to move quickly or deploy services across multiple markets.

That matters in a landscape where time-to-market is often the difference between leading and lagging, and where organisations are increasingly weighing the operational cost of compliance across regions. It also matters even more when there are already other constraints to contend with – such as access to available power.