U.K. Cloud Computing Market Size, Share, Growth and Industry Analysis By Type & Application, Regional Insights and Forecast to 2024-2032

Growth Factors of U.K. cloud computing Market

The U.K. cloud computing market is experiencing rapid digital transformation, establishing itself as one of Europe's most technologically advanced ecosystems. According to Fortune Business Insights, the market was valued at USD 38.97 billion in 2024, is projected to reach USD 46.30 billion in 2025, and is expected to expand to USD 603.38 billion by 2032, exhibiting a strong CAGR of 18.90% during the forecast period (2025-2032). The country's increasing emphasis on data sovereignty, AI integration, and hybrid cloud adoption is accelerating growth, supported by major investments from both domestic and global cloud providers.

Cloud computing in the U.K. has evolved from a supporting technology to a strategic foundation for innovation, scalability, and resilience across industries such as finance, healthcare, telecommunications, and government. The ecosystem is now dominated by hyperscale providers-Amazon Web Services (AWS), Microsoft Azure, Google Cloud, and Oracle-alongside agile local players like Bytemark, Pulsant, Hosting Services, and Content Guru, which specialize in compliance-focused, regionally governed cloud solutions.

Market Trends

Hybrid and Multi-Cloud Strategies Fuel Market Growth

U.K. enterprises are rapidly adopting hybrid and multi-cloud frameworks to reduce dependency on single cloud vendors, enhance data protection, and maintain regulatory compliance. Hybrid solutions combine public and private clouds, providing organizations with greater flexibility, scalability, and security. According to Cloud Computing News, hybrid multi-cloud adoption in the U.K. is forecasted to rise from 19% in 2024 to 26% by 2027, while multi-cloud usage is projected to jump from 11% to 46% within the same period. This trend is particularly relevant as businesses navigate post-Brexit data regulations under U.K. GDPR and NIS2 directives, which emphasize localized data control and security governance.

Market Growth Drivers

Expansion of Hyperscale and Regional Data Centers Accelerates Adoption

The increasing number of hyperscale and regional data centers across the U.K. is a primary driver of market growth. These facilities enhance data residency, reduce latency, and ensure compliance with national security and privacy requirements. Global cloud providers such as AWS, Microsoft, and Google Cloud are investing heavily in infrastructure to serve both commercial and public sector clients.

In October 2024, leading U.S. technology firms including CyrusOne, ServiceNow, CloudHQ, and CoreWeave collectively announced an investment of USD 6.9 billion to expand U.K. data center capacity. This initiative brings the total national data center investment to more than USD 27.3 billion, reinforcing the U.K.'s position as a European hub for AI-driven and cloud-based services.

Government Initiatives and AI Integration Strengthen Market Expansion

The U.K. government's ongoing push toward digital transformation and AI adoption further strengthens the cloud computing market. Public sector organizations are increasingly transitioning to sovereign cloud environments, ensuring compliance while benefiting from digital efficiency. Oracle's March 2025 announcement to invest USD 5 billion over five years to expand its U.K. cloud infrastructure underscores this momentum, supporting the country's AI-driven national strategy.

Market Restraints

Evolving Regulations Pose Challenges to Cloud Adoption

Post-Brexit regulatory realignments have added complexity for cloud service providers, particularly those operating across multiple jurisdictions. The implementation of U.K. GDPR, the National Security and Investment Act 2021, and sector-specific data laws for healthcare and finance require providers to comply with stringent data localization and security standards. Non-compliance can lead to financial penalties or restrictions on mergers and acquisitions, slowing innovation and market entry for foreign vendors.

Segmentation Insights

By Type:

The market is segmented into public, private, and hybrid cloud. In 2024, public cloud services dominated with a 54.1% share, driven by affordability and rapid deployment capabilities. However, hybrid cloud solutions are expected to record the highest CAGR during the forecast period, propelled by demand for secure, compliant, and flexible cloud architectures.

By Service:

Among services, Software as a Service (SaaS) held the majority market share in 2024, as businesses sought plug-and-play solutions for collaboration, CRM, and productivity. Meanwhile, Infrastructure as a Service (IaaS) is anticipated to grow at the fastest CAGR of 15.5%, reflecting increased demand for scalable computing and storage resources to support AI and analytics workloads.

By Enterprise Type:

In 2024, large enterprises accounted for 62.1% of total market share due to their early adoption of cloud technologies for digital transformation and cost efficiency. However, small and medium-sized enterprises (SMEs) are rapidly expanding their cloud adoption, supported by affordable subscription models and simplified integration tools, positioning them as future growth drivers.

By Industry:

The IT and telecommunications sector remained the largest end-user segment in 2024, leveraging cloud platforms to modernize networks and manage data-intensive operations. The healthcare sector is projected to register the fastest growth through 2032, driven by the need for secure cloud solutions to handle electronic health records (EHRs), telehealth platforms, and AI-driven diagnostics.

Regional Landscape and Key Players

The U.K. market features a blend of global hyperscalers and domestic providers specializing in data sovereignty and compliance. Key companies include:

• Bytemark (U.K.)
• Content Guru (U.K.)
• Hosting Services, Inc. (U.K.)
• Pulsant (U.K.)
• Krystal Hosting Ltd (U.K.)
• Centerprise International Limited (U.K.)
• Redcentric Plc (U.K.)
• CloudM (U.K.)
• Databuzz Ltd (U.K.)
• Transparity (U.K.)

These companies are expanding their presence by developing edge computing, hybrid cloud, and secure hosting solutions tailored to government, healthcare, and BFSI sectors.

Recent Developments

• March 2025: Oracle announced a USD 5 billion investment over five years to expand U.K. cloud infrastructure, supporting sovereign cloud and generative AI services.
• November 2024: SAP launched its Sovereign Cloud in the U.K., delivering localized, compliant cloud solutions for the public sector and regulated industries.
• October 2024: CyrusOne, ServiceNow, CloudHQ, and CoreWeave jointly invested USD 6.9 billion to enhance data center capacity in the U.K.

Conclusion

The U.K. cloud computing market is set for exponential growth, increasing from USD 38.97 billion in 2024 to USD 603.38 billion by 2032. This trajectory is fueled by AI integration, hybrid multi-cloud adoption, hyperscale investments, and strong regulatory frameworks ensuring data security and sovereignty. As domestic providers strengthen their capabilities alongside global hyperscalers, the U.K. is poised to remain a leading force in Europe's digital transformation, defining the next era of cloud-driven innovation and economic growth.

Segmentation By Type

• Public Cloud
• Private Cloud
• Hybrid Cloud

By Service

• Infrastructure as a Service (IaaS)
• Platform as a Service (PaaS)
• Software as a Service (SaaS)

By Enterprise Type

• SMEs
• Large Enterprises

By Industry

• BFSI
• IT and Telecommunications
• Government
• Consumer Goods and Retail
• Healthcare
• Manufacturing
• Others