Data Center Outsourcing Market - By Component (Hardware, Software, Service), By Physical Infrastructure (Data Center Facilities, Racks & Cabinets, Cabling & Wiring, Power & Cooling Infrastructure), By Organization Size (SMEs, Large Enterprises), End User, Forecast 2023 – 2032

Data Center Outsourcing Market Size

Data Center Outsourcing Market size was valued at USD 121.1 billion in 2022 and is projected to grow at a CAGR of over 5% between 2023 and 2032. The growing demand for big data analytics is a significant factor driving the data center outsourcing industry.
 

As organizations gather vast amounts of data, they require scalable and secure data centers to process & analyze this information efficiently. Outsourcing data center services provides access to cutting-edge infrastructure and expertise, allowing businesses to harness the power of big data analytics without the burden of managing complex data centers internally. For instance, in August 2023, Google launched BigQuery Studio, a data analysis and visualization tool that simplifies the process of working with large datasets. It provides data professionals with a user-friendly interface to explore, analyze, and gain insights from massive datasets, enhancing their capabilities for data-driven decision-making.
 

The growing adoption of cloud data center solutions and data center colocation services is a significant driver in the data center outsourcing market. Organizations are increasingly turning to these flexible and scalable alternatives to traditional on-premises data centers. Cloud data centers offer the agility and cost-efficiency needed for dynamic workloads, while data center colocation provides reliable infrastructure and connectivity options, making them attractive options for businesses seeking to optimize their IT operations and accelerate digital transformations.
 

Security and privacy concerns pose significant challenges in the data center outsourcing market. Organizations entrust sensitive & critical data to third-party data center providers, raising apprehensions about data breaches and unauthorized access. Ensuring compliance with data protection regulations adds complexity. Companies must carefully evaluate the security measures and certifications of outsourcing partners to mitigate these risks. Maintaining data privacy & security remains a top priority in an environment where data is a valuable & vulnerable asset.
 

COVID-19 Impact

The COVID-19 pandemic accelerated the data center outsourcing market as organizations rapidly shifted to remote work and digital operations. With the increased reliance on online services, cloud computing, and data storage, businesses sought scalable & reliable data center solutions to meet the surging demand. Outsourcing offered cost-effective options without the need for hefty infrastructure investments. Additionally, data center providers adapted to pandemic-induced challenges, ensuring business continuity, which further fueled the outsourcing trend.
 

Data Center Outsourcing Market Trends

The increasing adoption of Artificial Intelligence (AI) and Machine Learning (ML) is an emerging trend in the data center outsourcing industry. AI and ML technologies are being employed to enhance data center efficiency, automate routine tasks, and improve predictive maintenance. This results in reduced operational costs, increased reliability, and better performance. By harnessing AI & ML capabilities, data center outsourcing providers can offer advanced solutions that cater to the evolving needs of businesses in a rapidly digitizing world.
 

The growing adoption of colocation services is an emerging trend in the data center outsourcing market. Colocation allows organizations to place their IT infrastructure in data centers owned and managed by third-party providers. This trend is driven by the need for cost-effective and scalable solutions. Colocation providers offer robust security, redundancy, and connectivity options, making it an attractive choice for businesses looking to outsource their data center operations while maintaining control over their hardware and software configurations. It enables companies to focus on their core competencies while leveraging state-of-the-art data center facilities. For instance, in August 2023, Digital Realty, a leading global provider of data center solutions, introduced high-density colocation services on its PlatformDIGITAL platform. These services include infrastructure configurations ready for High-Performance Computing (HPC) and support businesses dealing with growing data challenges & artificial intelligence requirements.
 

Data Center Outsourcing Market Analysis

Based on organization size, the data center outsourcing market is divided into SMEs and large enterprises. The large enterprises segment is expected to grow at a CAGR of around 4.5% during the forecast period. The large enterprises segment is significantly driving the market growth due to their increasing reliance on complex IT infrastructures. These enterprises seek scalable & cost-effective solutions to manage their data processing and storage needs. Outsourcing allows them to access state-of-the-art data center facilities, reducing operational and capital expenses. Additionally, it provides flexibility and agility to adapt to evolving technology trends. Large enterprises benefit from outsourcing by focusing on core business activities, while outsourcing providers ensure high availability, security, and compliance with industry standards.
 

Based on end-user, the data center outsourcing market is categorized into BFSI, colocation, energy, government, healthcare, manufacturing, IT & telecom, and others. The IT & telecom segment was valued at over USD 25 billion in 2022. With the increasing demand for cloud computing, big data analytics, and IoT applications, IT & telecom companies require robust data center facilities. Outsourcing enables them to access specialized services and infrastructure while reducing operational costs This growth is driven by the sector's need for agility, scalability, and cost-efficiency. For instance, in September 2023, HCLTech launched a shared data center-as-a-service to facilitate cloud migration. This service aids organizations in transitioning their data center operations to the cloud by providing shared infrastructure and support, thus streamlining the migration process.
 

North America held a dominant data center outsourcing market share of over 35% in 2022. The region's robust digital economy demands scalable and secure data solutions, which outsourcing providers can efficiently deliver. Additionally, North America hosts a multitude of multinational corporations that seek cost-effective and agile data center solutions. This combination of factors positions the region as a hotspot for data center outsourcing growth, attracting both domestic and international investments.
 

For instance, in March 2023, Rimini Street introduced Rimini ONE, a comprehensive outsourcing solution encompassing IT operations, support, and maintenance. It provides organizations with a single, streamlined source for critical IT services, reducing complexities and costs associated with managing data centers. It also enables businesses to focus on their core operations while ensuring the reliability and efficiency of their data center infrastructure through outsourcing.
 

Data Center Outsourcing Market Share

Major players operating in the data center outsourcing market are:

• IBM Corporation
• Microsoft Azure
• Google Cloud
• Cognizant
• Amazon Web Services (AWS)
• NTT Communications
• Tata Consultancy Services (TCS)
• Verizon Communications
   

These players are focused on strategic partnerships, new product launches, and commercialization efforts for market expansion. They are also heavily investing in research to introduce innovative products and garner the maximum market revenue.
 

Data Center Outsourcing Industry News

• In August 2022, TCS was positioned as a leader in the Gartner Magic Quadrant for Data Center Outsourcing Hybrid Infrastructure Managed Services globally. In an assessment of 19 global DCO & hybrid infrastructure service providers, TCS was positioned highest for its Ability to Execute.

The data center outsourcing market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue (USD Billion) from 2018 to 2032, for the following segments:

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By Component

• Hardware
  • Servers
  • Storage devices
  • Networking equipment
  • Cooling systems
  • Power Distribution Units (PDUs)
• Software
  • Operating systems
  • Virtualization software
  • Management & monitoring software
  • Security software
• Service
  • Colocation services
  • Cloud services
  • Managed services
  • Network services
  • Security services

By Physical Infrastructure

• Data center facilities
• Racks & cabinets
• Cabling & wiring
• Power & cooling infrastructure

By Organization Size

• SMEs
• Large enterprises

By End User

• BFSI
• Colocation
• Energy
• Government
• Healthcare
• Manufacturing
• IT & Telecom
• Others

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • UK
  • Germany
  • France
  • Spain
  • Poland
  • Benelux
• Asia Pacific
  • China
  • India
  • Japan
  • Singapore
  • Australia
  • South Korea 
• Latin America
  • Brazil
  • Argentina
  • Chile
  • Colombia
• MEA
  • UAE
  • South Africa
  • Saudi Arabia