Data Center Outsourcing Market: Global Size, Share, Trends, Growth and Forecast 2022-2032
Data Center Outsourcing Market: Overview and Definition
The global data center outsourcing market is expected to grow from USD 145.2 billion in 2021 to USD 380.5 billion in 2032, at a CAGR of 5.2% during the forecast period 2022-2032. The data center outsourcing market refers to the practice of using third-party service providers to manage and maintain an organization's data center infrastructure. This market is driven by the increasing demand for scalable and cost-effective IT solutions, as well as the need to reduce capital and operating expenses. Key players in the market include IBM, HPE, Dell, Fujitsu, and Cisco, among others. The market is expected to continue to grow due to the increasing adoption of cloud computing and the trend towards digital transformation.
The business will present promising development possibilities, which are stemmed by the blend of various factors. Some of these factors are, the rapid increase in data traffic and the surge in growth of e-commerce business, the banking business, and cloud-based services.
Data center outsourcing is the practice of outsourcing the day-to-day management as well as provisioning of storage and computing resources to a third party provider with the expertise in deploying and maintaining data center outsourcing facilities. It enables the enterprises to flexibly manage their ICT infrastructures, without compromising the reliability and security.
The market is seeing extensive consolidations, geographical expansions, and acquisitions. These are embraced by the market players to enhance their competitiveness. This is to accomplish upgraded administration portfolios and to generate new revenue streams. For instance, in January 2021, EdgeConneX, one of the leaders in Edge data center development and a member of Oracle PartnerNetwork (OPN), announces the integration of its 33rd data center market to its portfolio of global Edge data center. This EdgeConneX Santiago, SCL01, facility offers local Santiago businesses as well as international service providers with 7MWs of low-latency and high-quality data center capacity.
Data Center Outsourcing Market: Key Drivers
The data center outsourcing market is driven by several factors, including:
Cost reduction: Outsourcing data center operations can reduce capital and operating expenses for organizations.
Scalability: Service providers can offer flexible and scalable solutions to meet changing business needs.
Expertise: Outsourcing allows organizations to leverage the expertise of service providers, who can provide specialized skills and knowledge.
Focus on core competencies: Outsourcing data center operations allows organizations to focus on their core business functions, while leaving infrastructure management to the experts.
Digital transformation: The trend towards digital transformation, including the adoption of cloud computing and big data analytics, is driving demand for data center outsourcing services.
Compliance: Service providers can offer expertise in regulatory compliance, which can be especially important in highly regulated industries.
Risk management: Outsourcing data center operations can help mitigate risk by providing disaster recovery and business continuity planning.
Data Center Outsourcing Market: Challenges
The data center outsourcing market also faces several challenges, including:
Security: Outsourcing data center operations can introduce security risks, as service providers may have access to sensitive data and systems.
Control: Outsourcing may lead to a loss of control over critical IT infrastructure and systems.
Compatibility: Service provider solutions may not be compatible with existing IT systems and applications.
Service quality: Service provider performance may not meet expectations, leading to issues such as downtime or slow response times.
Cost: While outsourcing can reduce costs, it can also lead to unexpected expenses, such as contract termination fees or additional charges for services not included in the initial agreement.
Data privacy: Compliance with data privacy regulations can be challenging when outsourcing data center operations, particularly if service providers are located in different countries with different laws and regulations.
Vendor lock-in: Switching service providers can be difficult and expensive, particularly if an organization has become dependent on the services provided by the vendor.
Data Center Outsourcing Market: Segmentation
Service Type Insights:
In view of service type, the market has been portioned into data center application outsourcing, enterprise application outsourcing, network application outsourcing, and others. The data center application outsourcing section is the biggest portion, regarding income, and may rule the innovation field, as far as size, by 2025.
The enterprise application outsourcing, network application outsourcing sections are ready to observe critical development rates. The need to manage, enhance and maintain the packaged or custom application software significantly drives growth of the enterprise application outsourcing segment.
The key players’ consolidations, collaborations, and acquisitions, to accomplish cutting edge innovation licenses, have advanced as a significant piece of the current data center outsourcing industry. For example, in April 2019, Accenture and Google Cloud, the part of Alphabet Inc. collaborated on the solutions to help enterprises improve and modernize their customers’ experiences in the main areas such as improving data management, enabling multi-channel customer interactions, and creating services for hyper-personalization in sales, marketing, and services.
Industry Vertical Insights
In light of industry vertical, the market is divided into IT & telecommunication, BFSI, healthcare & life sciences, travels & logistics, media & entertainment, and others. The BFSI industry fragment is the biggest section and will overwhelm the application field, by 2025.
The IT & telecommunication section would observe a quick movement as far as CAGR in contrast with its other sales partners. This is accredited to the fact that the IT & telecommunication industry is expanding to efficiently and effectively manage the growing amount of resources and data being generated, which in turn increases maintenance and operational cost of data centers leading to the complexities. This factor has boosted adoption of data center outsourcing services among mid-sized and large enterprises in IT & telecommunication industry.
The developing entrance of telecom foundation in creating economies, for example, China and India, is owing to the critical development of the innovation in the locale. Information transmission and correspondence administrations represent the significant portions of the telecom application field.
Data Center Outsourcing Market : Report Scope
Base Year Market Size
Forecast Year Market Size
Data Center Outsourcing Market: Regional Synopsis
Surge in investments in the Asia-Pacific region to drive the faster adoption of cloud computing solutions is fortifying the Asia Pacific market.
The North America area may surface as a main district over the estimated time frame. The provincial market development may be due to the well-built Information Communication and Technology (ICT) industry in countries such as the U.S. and Canada. In addition to this, new openings of data centers along with the increased investments for data center outsourcing pushes demand for data center outsourcing and driving the market growth in North America. For instance, in February 2020, Google revealed the expansion plans for the year 2020. The plan was projected to enable Google to increase its reach across 11 US states. Also, the company announced to invest about $10 billion in facilitating the development of data centers in states such as Massachusetts, California, Georgia, Colorado, and Nebraska.
In addition, the rise in adoption of advanced technologies the market in Europe is very dynamic as well as innovation driven. The market is expected to experience significant growth rate in countries such as United Kingdom, Germany, and France.
Data Center Outsourcing Market: Recent Developments
The data center outsourcing market has seen several recent developments, including:
- Increased adoption of hybrid cloud solutions, which combine public and private cloud services with traditional IT infrastructure, creating new opportunities for service providers.
- Growing demand for edge computing solutions, which allow organizations to process data closer to the source, leading to increased interest in edge data centers.
- Rising concern over data security and privacy, leading to increased scrutiny of service providers and a focus on regulatory compliance.
- Consolidation in the market, with large technology companies acquiring smaller service providers to expand their offerings and capabilities.
- Increased use of artificial intelligence (AI) and automation to improve data center operations and reduce costs.
- Growing interest in sustainable data center solutions, such as using renewable energy sources and reducing energy consumption through advanced cooling technologies.
- The impact of the COVID-19 pandemic on the market, including increased demand for cloud services and remote access solutions, as well as disruptions to supply chains and data center operations.
Data Center Outsourcing Market: Key Players
- Tata Consultancy Services
- Tech Mahindra
- IBM Corporation
- Fujitsu Ltd
- Oracle Corporation
- Hewlett Packard Enterprises