Data Center Outsourcing Market

Data Center Outsourcing Market Size

A comprehensive report by Global Market Insights Inc. projects the data center outsourcing market was estimated at USD 132.3 billion in 2024. The market is expected to grow from USD139.1 billion in 2025 to USD 243.3 billion in 2034, at a CAGR of 6.4%.

• Outsourcing data centers are rapidly evolving around hybrid cloud environments. Organizations desire both private and public cloud, as a blend that balances control, security, and scalability. In turn, data center providers are offering solutions built upon having their private cloud with the flexibility of public cloud services from companies such as AWS, Azure, or Google Cloud. Outsourcing now often includes managing costs and performance across these completely disparate environments.
  
• As the focus on IoT, 5G, and real time data applications increase, processing data closer to the data source an evolution called edge computing is becoming a necessity. Data center outsourcing is evolving towards a more distributed model with smaller data centers controlled closer to users and users' devices. To meet demand, providers are moving toward localized data center networks and offering edge computing solutions.
  
• In the United States, hyperscale data center operators like Amazon Web Services (AWS), Microsoft Azure, Google Cloud and others are large on outsourcing. They have enormous computing power and storage capabilities that tend to be attractive for enterprises to speed up without huge initial investments.
  
• With highly multi-faceted U.S. regulations such as HIPAA for the healthcare industry, FINRA for finance, and the California Consumer Privacy Act (CCPA), data center outsourcing providers are compelled to comply with rigorous compliance. It is precisely this regulatory atmosphere that puts a very high requirement on U.S.-based data centers and providers that have demonstrated compliance excellence. Businesses operating in the U.S. are required to keep data in country to meet federal and state law requirements, which often call for strong data privacy and security compliance.
  
• The COVID-19 pandemic significantly accelerated demand for data center outsourcing in America as businesses migrated to remote work, digital services, and online customer experience very quickly. This sudden spike in digital consumption created a need for scalable, reliable, and secure IT infrastructure, compelling all businesses to outsource data center operation to specialized providers that were able to quickly re-engineer to address changing workloads and ensure business continuity.
  

Data Center Outsourcing Market Trends

• Instead of leasing or buying entire data center premises, companies are increasingly adopting Data Center as a Service (DCaaS) offerings where companies utilize data center capacity on-demand, very much like cloud computing. The arrangement is more agile, involves faster provisioning, and is cost-saving by paying only for utilized resources, enabling organizations to more effectively adapt to fluctuating workloads without the capital costs.
  
• As the risk of natural disasters, cyberattacks, and other disruptions continues to increase, companies are turning to third-party data center vendors to outsource their disaster recovery (DR) and business continuity activities. With the added benefit of a trusted vendor providing backup, replication, and fail-over options, companies can continue accessing their critical data and applications, even in the event of a disastrous failure. Consequently, these vendors reduce both downtime and economic loss.
  
• In August 2025, Google partnered with Indiana Michigan Power and the Tennessee Valley Authority to use demand response strategies at its AI data centers. The practice involves relocating non-mission-critical AI tasks to less congested times of day when the need for electricity is lower, with the goal of alleviating the load on local power grids during peak periods. Its important functions like Search in Maps are unaffected, but this is an interesting development period on the intersection of AI infrastructure with renewable energy activities.
  
• Environmental impacts and energy prices are causing outsourced data center vendors to go green. This will include renewable power, advanced cooling techniques, and power efficient management principles. Most customers require green certifications (like LEED or Energy Star) to be included in their outsourcing agreements.
  
• Automation is transforming the management of outsourced data centers. Providers utilize AI and machine learning to carry out predictive maintenance, capacity planning, anomaly detection, and energy optimization. Automation reduces human error, boosts uptime, and lowers operational costs.
  

Data Center Outsourcing Market Analysis

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Based on component, the market is divided into hardware, software and services. The hardware segment dominated the data center outsourcing market, accounting for around 43.7% share in 2024 and is expected to grow at a CAGR of over 6.4% through 2034.

• The hardware in data centers also comes with high initial cost and often requires an upgrade to accommodate the change in technology and increase data requirements. The outsourcing of hardware management services is desired by a majority of institutions with the aim of reducing capitals expenditure and operating on an operational expense model leading to the demand of outsourcing hardware services.
  
• As there is also rising panic over environmental effects and investment costs, data centers are increasingly turning to energy-efficient products. In recent years, vendors have been producing servers, storage devices, and network gears that use less power and smaller heats.
  
• Automation platforms are emerging as the pivot point for operating large-scale outsourced data centers. Provisioning, configuration, monitoring, and management are automated using software tools, which drastically reduce human errors and operational costs. Predictive hardware failure, power and cooling optimization, and dynamic resource allocation depending on real demand are done using AI and machine learning algorithms.
  
• Outsourcing providers are modifying their offerings to tackle the unique regulatory and operational needs of various verticals such as healthcare, finance, manufacturing, and government. These modified offerings can be compliance models, security controls with specializations, or application-specific infrastructure designs that meet industry needs as well as business needs.
  
• To leverage the growing demand for AI infrastructure, Apollo Global Management acquired a majority stake in Stream Data Centers. The investment supports the growing demand and adoption of digital infrastructure related to the needs of AI and cloud computing. Some of the major technology companies, such as Meta, Microsoft, and Alphabet, are expected to invest more than $60 billion in AI-related infrastructure per year.
  

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Based on physical infrastructure, the data center outsourcing market is segmented as data center facilities, power & cooling infrastructure, racks & cabinets, cabling & wiring and others. The power & cooling infrastructure segment is expected to grow at a CAGR of 8.7% from 2025 to 2034.

• Outsourcing providers are investing in innovations around power & cooling infrastructure to enhance energy efficiency and reliability. Next-generation cooling technology, such as liquid cooling, free cooling, and AI-enabled climate management systems are being deployed in outsourced data centers to manage the heat produced by heavier computational workloads.
  
• Other enhanced physical security capabilities such as biometric access, tamper-evident tape, and seals are increasingly being installed to protect the client assets hosted in providers' outsourced facilities. The innovations being made within the rack & cabinets category are not only improving the utilization and security of physical space in data center facilities but also enabling flexibility for client specifications.
  
• In the cabling & wiring area, outsourced data centers utilize structured cabling systems that adhere to standards like ANSI/TIA-568, to ensure network connectivity is scalable, manageable and efficient. There is a rapid increase in the adoption of fiber optic cabling to facilitate the high bandwidth, low latency requirements of cloud services and big data workloads.
  
• In March 2025, Huawei introduced its AI-Ready data storage solutions including the FlashEver business model; to help carriers transform data that's in disarray into a valuable asset. These solutions help the telco-to-techno transformation by allowing carriers to utilize AI and enhance their services and business models.
  

Based on deployment model, the data center outsourcing market is segmented into public cloud deployment, private cloud deployment, hybrid cloud deployment, community cloud deployment, and multi-cloud deployment. The public cloud deployment segment is expected to dominate the market, holding a share of 45.1% in 2024.

• Public cloud data center outsourcing is all about scalability and cost. Providers are expanding their global data center infrastructure to support enterprises as they move workloads to public clouds for flexibility and speed to innovation. Demand for managed services and security improvements in an outsourced public cloud environment is allowing providers to grow.
  
• Outsourced adoption of private clouds will accelerate as enterprises desire more control, security, and compliance. Providers are offering a tailored solution with dedicated infrastructure and resources in managed services, allowing enterprises to operate sensitive workloads off-site. Further automation capability and compatibility with hybrid infrastructure and services will make managed private cloud outsourcing more efficient and attractive, especially for organizations in regulated industries.
  
• As companies combine on-premises and cloud resources for agility, hybrid cloud outsourcing is becoming a trend. Solution providers focus on integrations, unified management, and data portability, which make it easier to consume the workloads in an optimized manner. Outsourced hybrid clouds allow businesses to have a balance between control and scalability. They enable organizations to drive their digital transformation while dealing with challenges such as latency, security, and compliance.
  
• In 2025, Amazon Web Services (AWS) will deploy its European Sovereign Cloud, in which only the citizens of the European Union will became eligible to work. With construction set to cost USD 8441.6 million, this is an initiative that aims to satisfy the most restrictive EU data residency and has all major processes such as the access of their data center and customer service completely in jurisdiction with EU law.
  

Based on organization size, the market is divided into SMEs, large enterprises and government and public sector. The large enterprise segment is expected to grow at a CAGR of 7.7% from 2025 to 2034.

• The large enterprise segment is significantly driving the data center outsourcing 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.
  
• SMEs are seeking to outsource data centers to reduce IT costs, access enterprise-level infrastructure without heavy capital investment, and as an alternative to self-hosting data, both cloud and on-premises. Outsourced options are typically cloud-based managed services and software-as-a-service (SaaS) which can be scaled as needed with pay-as-you-go pricing and contractors. An SME benefits from outsourcing by focusing on its core business while ensuring its information security and compliance needs are addressed by trusted outsourcing partners.
  
• Governments often look to outsource data centers to meet robust data sovereignty and security requirements while still managing costs. The preferences include private and community cloud models, disaster recovery services, and compliance with legislation such as GDPR and FedRAMP. Outsourcing is observed to modernize the information technology infrastructure while improving service citizen services with secure and reliable infrastructure.
  

Based on industry vertical, the data center outsourcing market is categorized into BFSI, IT and telecom, healthcare and life sciences, government and public sector, manufacturing and industrial, retail and e-commerce and other industries. The IT and Telecom segment dominates the market and holds a revenue of around USD 17.6 billion in 2024.

• The IT & telecom segment is expected to grow at a CAGR of 9.6% from 2025 to 2034. As the demand of cloud computing, big data analytics and IoT Deployment model boost, IT & telecom firms demand a high-quality data center. Outsourcing allows them to avail expertise and infrastructure services without increasing the operational expenses. This expansion is liquidated by the necessity of the sector to be nimble, scalable, and cost-efficient.
  
• 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.
  
• The BFSI industry focuses on data security, regulatory compliance and disaster recovery aspects when it outsources data centers. The move to hybrid cloud then is strong, to balance legacy systems and systems of record with modern Deployment model workloads. AI and analytics in outsourced data center settings facilitate the fraud detection and better customer experience.
  
• In healthcare, secure and compliant data center outsourcing is critical for protecting sensitive patient data while supporting the growth of telemedicine. The hybrid and private cloud options adopted by the healthcare sector are enabling clinicians with AI-driven diagnostic capabilities. The rapid growth of advanced research data management, and the integration of research across various applications and projects require health organizations to abide by regulations such as HIPAA.
  
• The retail industry uses outsourced data centers to manage seasonal demand that fluctuates greatly, while leveraging AI-driven personalization to improve customer experience. Multi-cloud approaches to technology environments, and the increased capabilities of edge computing, improve scalability and latency, support omnichannel retailing, and enable real-time inventory management.
  

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US dominated North America data center outsourcing market with around 76.1% share in 2024 and generated a revenue of USD 34.8 billion in 2024.

• Majority of large global and domestic cloud and data center service providers, such as AWS, Microsoft Azure, Google Cloud, and IBM, have significant data center footprints in the US. Increasing speeds of data privacy regulations like the California Consumer Privacy Act (CCPA) is one of the biggest drivers of growth in outsourcing. Organizations are increasingly relying on external providers with certified data centers and regulatory expertise to minimize potential legal issues and show compliance with all complex compliance regulations.
  
• The enterprise landscape in Canada is moving from conventional infrastructure outsourcing to integrated cloud-centric models driven by speed and innovation, creating a tremendous appetite for outsourcing providers that can provide hybrid cloud management, multi-cloud orchestration, and migration services.
  
• In July 2025, Blackstone disclosed it is to invest $25bn in data centers and power infrastructure in Pennsylvania, which it describes as a critical research hub for AI and collocation. The investment plans also include a tie-up with the power utility firm PPL to build natural gas plants aimed at cutting costs and speeding time to market.
  

The data center outsourcing market in the UK is expected to experience significant and promising growth from 2025 to 2034 at a CAGR of 4.7%.

• The adoption of 5G and edge computing is rapidly decentralizing data infrastructure in the Netherlands. Telecom companies and colocation providers have started building and operating regional and edge data centers to accommodate latency-sensitive applications and limit congestion in areas with high density where digital data is generated like Amsterdam.
  
• AI is transforming the overall data center architecture in Europe. Facilities have been deploying GPU clusters, liquid cooling, as well as other miscellaneous designs to power the intensive computations for AI applications. This disruption is considered to be essential in increasing the productivity and scalability of AI applications.
  
• Deutsche Telekom is collaborating with Nvidia and Brookfield to develop an AI-focused data center, or gigafactory, in North Rhine-Westphalia, Germany. This project aims to build community cloud infrastructure designed for AI workloads to improve partnership opportunities between community partners.
  

The data center outsourcing market in China is expected to experience strong growth from 2025 to 2034, holding a share of 20.2% in Asia Pacific in 2024.

• Edge and hyperscale data centers are growing rapidly in Asia-Pacific to accommodate the increasing need for low-latency applications and fill the demand for processing massive amounts of data. This also includes outsourcing providers making large investments in edge infrastructure that is located close to the user, especially in urban or industrial locations. As organizations grow in adopting new technologies, such as 5G, AI and autonomous systems where processing real-time data at the edge will be common, the demand for edge data centers has increased in a meaningful way.
  
• With China's restrictive laws on cybersecurity and data residency there is significant demand for edge data centers driven by 5G's rollout, smart city incentives, etc., and outsourcing providers are investing in data centers close to urban centers to enable low-latency connectivity. There is also increasingly high marks on compliance with national requirements, such as the Cybersecurity Law and how this will influence outsourcing partnerships, and how service providers can show they have data protections in place along with operational governance.
  
• China is rapidly scaling up its capabilities across its AI landscape. The government plans to construct 39 AI data centers, mainly located in Xinjiang and Qinghai, totaling over 115,000 high-performance Nvidia H100 and H200 GPUs. About 70% of the total GPU capacity will be located in a massive, state-owned AI facility in Yiwu County, Xinjiang, to be completed in the coming years. This development raises questions about sourcing, and the efficacy of export restrictions to advanced AI hardware.
  

The data center outsourcing market in Brazil holds a share of 35.2% in 2024 and is expected to experience high growth from 2025 to 2034.

• Data center operators are placing an increasing emphasis on sustainability through the incorporation of renewable energy. Scala Data Centers and Tecto in Brazil are both making huge investments in wind and solar liberating the energy requirements of hyperscale facilities. Google has initiated a carbon removal agreement in Brazil and is also committed to running on renewable energy and AWS committed to match all its energy usage with renewable energy.
  
• Countries are instituting data protection legislation similar to the EU's GDPR regulation, requiring organizations to host their data locally. This transformation in data protection legislation and the growing volume of data requiring secure hosting has resulted in a surge in local data center hosting demand in cities such as São Paulo, Buenos Aires and Mexico City.
  
• Developments in artificial intelligence (AI) and high-performance computing are increasing the demand for AI-Capable Infrastructure. Businesses in finance, healthcare, logistics and agriculture want to utilize data centers with high-density racks, accelerated GPU(s), and ultra-low latency connection.
  

The data center outsourcing market in UAE is expected to experience significant growth from 2025 to 2034 and held a revenue of USD 2.4 billion in 2024.

• Outsourcing suppliers are also paying more attention to sustainability. NEOM and the Maktoum Solar Park solar project in the UAE are both paving a way toward greener data centers in the Middle East, whilst players in Africa, namely Equinix and some players in South Africa are now announcing solar implementations as both reliance and a reduced carbon footprint.
  
• AWS, Microsoft, Google, Oracle, Huawei and Tencent have made new investments into the MEA region, including colocation services and new cloud regions, including Microsoft's new cloud region in Saudi Arabia and Google's new cloud region in Cape Town.
  
• Nigeria is the largest demand driver in Africa, with recent fintech growth and additional digital economy expansion, though issues around power builds remain. Several countries including Ethiopia, Uganda, are building major new infrastructure commitments including Raxio-backed projects.
  

Data Center Outsourcing Market Share

• The top 10 companies in the data center outsourcing industry are Accenture, Amazon Web Services (AWS), Cognizant, Digital Realty, Equinix, Fujitsu, Google Cloud, Microsoft Azure, Tata Consultancy Services (TCS) and Verizon Communications. Google Cloud, Amazon Web Services (AWS), Microsoft Azure, Accenture and Tata Consultancy Services (TCS) contributes around 18.8% of the market share in 2024.
  
• Google Cloud stands out because it excels in sophisticated technologies like AI, machine learning, and data analytics (think Vertex AI, TensorFlow, and Gemini). These options appeal to enterprises in the early stages of AI-based launches looking for advanced tooling.
  
• AWS is the largest global cloud infrastructure company with a huge global data center footprint, and the scalability that comes with volume. The breadth of offerings and the fact that it was first highly successful makes AWS the cloud provider of choice for outsourced cloud and hybrid environments.
  
• Accenture is an end-to-end IT outsourcing company, and that includes data center transformation, cloud migration, or managed services. In addition to a full service offering, its consulting led model and partnerships with all the major vendors position it as a more strategic outsourcing partner.
  
• TCS offers a complete outsourced infrastructure management and data center outsourcing service supported by a global delivery model with both a regional and global reach. With cost-effective solutions, long-term IT outsourcing contracts, and working experience with large enterprises complex business requirements.
  

Data center outsourcing Market Companies

Major players operating in the data center outsourcing industry are:

• Accenture
• Amazon Web Services (AWS)
• Cognizant
• Digital Realty
• Equinix
• Fujitsu
• Google Cloud
• Microsoft Azure
• Tata Consultancy Services (TCS)
• Verizon Communications
  
• Accenture is a global leader in IT services and consulting which delivers full data center outsourcing that includes infrastructure transformation, cloud migration and managed services. Its value comes from experience with deep domain expertise in that area, along with a network of strategic relationships across hyperscalers such as AWS, Microsoft and Google Cloud.
  
• As the original public cloud infrastructure provider, AWS is a major player in the data center outsourcing sector. AWS is the only data center service model in the world, providing a massive global footprint of availability zones, an expansive catalog of cloud-native services, and a pay-as-you-go operating model that allows enterprises to decouple their infrastructure operations at scale.
  
• Cognizant offers a strong data center outsourcing and IT infrastructure capability rooted in its legacy system Organization Size for clients leading towards various cloud architectures. Cognizant's global delivery model and automation, cyber security and hybrid cloud management focus also make them a preferred for enterprises looking to optimize, and offload, their data center operations.
  
• Digital Realty is one of the bigger global colocation and interconnection providers managing over 300 data centers around the globe. Digital Realty helps enterprises and cloud providers outsource their physical hardware while retaining control over their deployments. Its size, carrier neutral facilities, and interconnection offerings have meant it is often engaged by partners adopting global hybrid and multicloud strategies.
  
• Equinix’s unique role in the world of data center outsourcing is as a provider of carrier-neutral, interconnected data centers on five continents. The company delivers colocation, edge and interconnection offerings, providing the advantage of low latency, better performance and access to digital ecosystems across the globe. Equinix builds on its extensive focus on ecosystem connectivity, making it an ideal fit for hybrid cloud deployments.
  
• Google Cloud has been an important player because of its advanced capabilities in AI and data analytics and scalable infrastructure to support enterprises wanting to outsource data-heavy workloads and complex machine learning workloads. Google Cloud's growing global footprint, and commitment to sustainability and open-source technologies are also helping it become the cloud provider of choice for providers with a future-focused outsourcing project.
  

Data Center Outsourcing Industry News

• In October 2024, Fujitsu and Supermicro announced a partnership to provide liquid-cooled, energy-efficient AI infrastructure for data centers, including Fujitsu's FUJITSU-MONAKA Arm-based processor and Supermicro rack-scale GPU servers as the foundation for green AI implementations.
  
• In February 2025, Google announced a massive USD 75 billion capital expenditures to enhance its AI and cloud infrastructure on a global basis with this new investment to focus on expanding capacity for servers, networking hardware, and hyperscale data centers. The investments will address increasing demand and limitations on capacity with generative AI workloads.
  
• In July 2025, Google spent over USD 25 billion to improve data center and AI infrastructure in the largest electric grid in the U.S. i.e., PJM Interconnection across 13 states. Google is also spending an extra three billion US dollars in the modernization of hydropower plants to obtain greener and renewable energy to support its activities.
  
• In April, 2025, Microsoft invested in increasing its European data center availability by 40 percent within two years, as it read the rise in demand of AI and cloud services in the region. The investment is intended to expand physical infrastructure as well as promoting data sovereignty and regulatory conformity. To facilitate these efforts, Microsoft also announced the creation of a European Data Boundary Board, which will have oversight over all the legal and operational alignment with applicable EU data protection laws.
  

The data center outsourcing market research report includes in-depth coverage of the industry with estimates & forecasts in terms of revenue (USD Mn/Bn) from 2021 to 2034, for the following segments:

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Market, By Component

• Hardware
• Software
• Service

Market, By Physical infrastructure

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

Market, By Deployment model

• Public cloud deployment
• Private cloud deployment
• Hybrid cloud deployment
• Community cloud deployment
• Multi-cloud deployment

Market, By Organization Size

• Small/Medium enterprises
• Large enterprises
• Government and public sector

Market, By Industry vertical

• BFSI
• IT and Telecom
• Healthcare and life sciences
• Government and public sector
• Manufacturing and Industrial
• Retail and e-commerce
• Other industries

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

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