What is Data residency?
Data residency is the requirement or choice to store and process data in a specific country or region, often to meet legal, contractual or customer rules.
In more detail
It comes from laws (some countries restrict moving certain data abroad), regulators (in banking and health, for instance) and customer contracts. It covers more than the main database: backups, logs, support exports, vector indexes and the location where an AI model processes prompts. A cloud region setting does not settle it if a subprocessor outside the region handles the data. Ask each vendor where data is stored, where it is processed, who can access it and whether prompts are retained. When requirements are strict, options include region-specific cloud endpoints or running a private model in your own environment. Data residency is different from data sovereignty, which concerns whose laws apply.
Example
A finance team requires invoice images to stay in-country. The project uses an in-region storage bucket and a model endpoint in the same region, and the contract lists every subprocessor.